The Raisi administration has settled its debts to three public organizations and pension funds, including the Social Security Organization, the government spokesman.
“Reimbursed debts amounted to 1,300 trillion rials [$4.2 billion],” Ali Bahadori Jahromi told reporters on Wednesday,
The repayments were made by divesting government shares in state-owned companies -- a common practice of governments in the past.
Amid tight budget revenue and high spending, swapping stocks in lieu of debt has been one of the means governments have used over the years.
According to Jahromi, small amounts were paid to the Martyr Foundation and Veterans Affairs and Civil Servants Pension Organization. The latter’s share was 200 trillion rials ($645 million) and the pension fund got 90 trillion rials ($290 million).
Billion are owed to the SSO, the biggest insurance company in Iran that offers services to non-state workers and the self-employed.
In fiscal 2022-23 the government is supposed to repay debts worth 900 trillion rials ($2.9 billion) to the SSO by transferring shares.
Government arrears to the SSO keep on rising largely due to its failure to pay its share of insurance premium of workers plus its inability to meet other financial commitments under the law.
As a non-government organization, the SSO is largely funded by insurance premium contributions (7% by employees, 20-23% by the employer and 3% by the government).
Most governments in the past never paid their full share. An estimated 50 million Iranians are under SSO cover. Iran’s population is close to 85 million.
Unpaid debts over the years are estimated to be in the region of 4,000 trillion rials ($12.9 billion), of which the Audit Organization has confirmed 3,600 trillion rials, according to IRNA, the state news agency.
The government should pay about 1,000 trillion rials ($3.2 billion) as its share of insurance premium in the current fiscal year.
Following the partial debt settlement, IRNA said the SSO was able to pay its own arrears to its affiliated lender, Bank Refah Kargaran.
Citing Mirhashem Mousavi, the SSO chief, the news outlet said that the pension fund repaid 880 trillion rials ($2.8 billion) to the lender.
There was no cash payment, however, and the SSO gave shares to the Refah Bank instead of its arrears in the same way as the government.
Over the years the giant organization has acquired government assets to swap debt. SSO owns major industries and companies and has emerged as an economic conglomerate. Its investment’s wing, the Social Security Investment Company (known by its Persian acronym Shasta) is one of the richest and powerful holding companies in Iran.
