PSSSF debt measure reaffirms faith in basics, public goodwill

28Dec 2021
Dar es Salaam
The Guardian
PSSSF debt measure reaffirms faith in basics, public goodwill

THE government has moved to start liquidating its huge debt to the Public Sector Social Security Fund (PSSSF) with that amounts to a 500bn/- down payment for a 974bn/- verified or approved debt, and a wider investment package of 2.5trn/- stretched out from eight to 25 years.

The latter component was a bit technical or complicated to the general reader, but the 500bn/- was straightforward, as it ensures that the fund will not be wanting in liquidity in the near future or the foreseeable near term.

It is altogether a sort of new deal not just for that institutions but for the savers and beneficiaries it serves; it is what matters.

Treasury permanent secretary Emmanuel Tutuba noted in the signing ceremony that PSSSF hands out way over 60bn/- to beneficiaries each month, money that is vital for the country’s economy, aside from rightful expectations of beneficiaries, that is.

What the rolling 2.5trn/- bond suggests is that PSSSF isn’t that much assured from creating investment funds from its own sources, which can be understood in the wake of the changes in the financial sector and commercial housing landscape for a number of years now. With changes in public expenditure that was heavily accented on recurrent bills, rental space demand fell.

With the economy rising in a relatively different model from what there was earlier, PSSSF assets will be in greater profitability in due course, and definitely it needs to pursue current projects apart from being able to meet its maturing commitments to retirees.

That is what the two components of its agreement with the Treasury seems to underline, but it wasn’t the PSSSF deciding on the course to be followed but the government, and in that case President Samia Suluhu Hassan, as the signing parties duly pointed out. It reflects on enhanced government goodwill definitely, but also on higher productivity of economy, chiefly.

What is noticeable is that the government is no longer overly reliant on pension funds for its objectives, and instead it is turning into a net creditor rather than net debtor for the funds, which means they will be able to carry out their activities in good rapport with beneficiaries.

As late as three or four years ago the big debate was whether one can withdraw funds on cessation of employment, or wait until the age of 60 whatever the circumstances, which many considered to be unfair.

But its premise was low government willingness to repay the cash it owes, and excessive commitment of pensioners’ funds in projects, etc.

Strictly speaking this turn of fortunes for pension funds is a result of fifth phase restructuring of appetites in the government, clamping down hard on indulgent budgeting where 74 per cent of total expenditure was meant for recurrent use, and only 26 per cent for development needs.

Not only was this restructured to 61 per cent and 39 per cent use respectively but disciplined use was accentuated. With other factors contributing, like diminishing reliance on imported fuel, mining sector revenues, the shift was possible.

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