GIPF could become govt piggy-bank
The Independent Patriots for Change recently suggested that government should turn to the GIPF, NamWater and NamPower to provide funding for flailing Air Namibia.
18 February 2021 | Transport
There are currently no laws in place that stop government from turning to the Government Institutions Pension Fund (GIPF) to bail out ailing public entities.
This follows a recent suggestion by the Independent Patriots for Change that government turn to the GIPF, NamWater and NamPower to provide funding for Air Namibia, which imminently faces potential liquidation.
The party suggested that government should borrow N$2.5 billion from the two public entities and the pension fund, and, in turn, give those monies over to the national airline to assist it with its debt, which stands at N$1.3 billion.
This while government will have to pay leases amounting to N$2.5 billion for lease two Airbus A330 aircraft if Air Namibia is liquidated.
Pension expert Tilam Friedrich said there are currently no regulations barring the GIPF from assisting government. Government has in the past also turned to the pension fund.
“As things stand, the GIPF can very well be pressurised to make ‘political investments’,” he said.
With the new Financial Markets Bill (FIM) in the works, Friedrich was asked whether that would potentially bar government from turning to the GIPF in its time of need.
“The FIM Bill itself currently does not change the manner in which trustees must manage the monies of their pension funds. This may well change once the FIM Bill becomes effective and new investment regulations are issued,” he said.
According to Friedrich, government is able to appoint the board of trustees of the GIPF.
“Through these trustees, government can conceivably exercise pressure on the GIPF to invest in government debt,” he added.
The GIPF in 2016 invested in government bonds, effectively assisting government with its cash flow woes at the time - to the tune of N$5 billion.