Social Security Board Addresses Criticism Over Multi-Million Dollar Loan to Private Company

In recent months, several concerns have been raised suggesting that the Social Security Board (SSB) is “giving away” national funds to private companies. The concerns arose after a notice was published indicating that Caribbean Tires Wholesale Limited would be receiving a seven million dollar loan.  In response to the criticism and skepticism, SSB’s Chief Executive Officer, Dr. Leroy Almendarez sought to clarify the purpose of loans given and the approval process.  He noted that the loans are designed to offer financial support while investing the SSB funds with a look at earning returns on its investments.  

Dr.Leroy Almendarez, CEO, Social Security Board: “I think for the public when it came to social media was the loans. I think that’s the one that they believed that you’re giving away the money when in fact you’re not. If a loan is approved , a loan is approved with an interest rate tied to it which means we expect to get interest income but that loan has to be properly collateralized because if any shortfall or as we refer to it if your ability becomes impaired to pay then we have the collateral as security against that loan. But the most important thing for us is to make sure we do all, that it follows the guidelines, all those required analysis we do before that is approved.”

According to Dr. Almendarez, the loans are issued at a six point five percent interest rate.  He went further by outlining the security measures and assessments in place to minimize financial risk and promote responsible lending. These measures include stringent criteria for loan eligibility, regular financial assessments, and build-in safeguards for long-term sustainability. 

Dr.Leroy Almendarez, CEO, Social Security Board: “Whenever a loan is given we expect that whatever is generated in terms of income will contribute to the growth of this economy because that’s important. Remember every dollar that is earned whenever you have shortfall and that’s why when you have deficit spending it simply means that deficit spending should generate surplus. You don’t borrow a loan to pay a loan. It should generate surplus and these surplus, this surplus or surpluses from wherever because it’s consolidated in economics there’s a multiplier effect every dollar that is generated multiplies through an economy and this is what happens to the macro economy. That’s how we see it and that’s why we have to have that economic focus. Yes social protection but if you address those social protection variables under the SDGs it simply means that’s what we’re doing. A healthier life, a more educated because we contribute to education all those things, all those things contribute to that growth that we’re talking about. One of the things that we have not mentioned here is risk appetite and that’s important for us to remember. What’s the appetite do we have to underwrite any of these risks that we’re talking about ? In the agro productive industry it is one of our priority areas for investment and if the mere fact that we want to export more to bring in more foreign currency that’s the investment in for example CPBL. We know what they have gone through but we continue to make sure and what we do we have representatives on their board to make sure that we follow some of these things.”

The types of investment loans offered by the Social Security Board are categorized as startups, commercial and syndication loans.