Already more than 8 billion euros ($10.63 billion) in debt, Greece’s main social security fund, IKA, can’t cover pensions for October and will have to borrow 150 million euros ($199.43 million) to pay benefits.
Greece’s crushing economic crisis has left the country still than $390 billion in debt, despite borrowing $325 billion from international lenders and imposing harsh austerity measures for more than three years.
The newspaper Kathimerini said it uncovered the shortfall in IKA and that the agency is in dire straits. Greece is so strapped for cash that pensioners could lose much, or all, of the lump sumps they have earned over the years with money deducted from their paychecks.
IKA has taken a five-day loan from the State General Accounting Office but there are fears that the short-term measure is only temporary and that it won’t be able to keep paying pensions without continuing to borrow, putting a crimp in Prime Minister Antonis Samaras’ “success story” for a recovery of the Greek economy.
IKA was hoping that giving companies who haven’t paid their dues into the system a four-year payment plan would help, but the agency has been undercut by a record unemployment rate of 27.6 percent that has seen many businesses close or unable to pay what they owe to the system. Only 6,900 businesses, a small percentage, have agreed to a payment plan to pay off their debts.
Despite the greater influx of tourists this summer and the option of a payment plan for trouble companies, IKA only saw its revenues increase by 0.1 percent from July to August. In July, the fund only brought in 22 million euros from companies with which it had reached a settlement. Twelve months earlier, IKA collected 132 million euros from firms that were late payers.
Greek officials are to discuss these problems with the Troika, its lenders, who are due back in Athens this month to check the progress of reforms in return for continuing to provide rescue aid. The Troika has asked for social security contributions to be reduced by 3.9 percent by 2016 but the government said that would create an even greater shortfall.
The liquidity problems at IKA could also have implications for the funding gap in the Greek program, already estimated at $11-$14 billion, which could mean new austerity measures despite Samaras’ pledge not to impose any more pay cuts, tax hikes and slashed pensions.
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