SSO Blocks Tehran Municipality Accounts Over Debts

The Social Security Organization has moved to block all accounts belonging to Tehran Municipality after the urban administration failed to clear its debts dating back to at least two years ago.

“Tehran Municipality owes a total of 4.7 trillion rials ($114.9 million) to SSO by the end of the fiscal 2014-15, but in spite of all the negotiations that have transpired between the two organizations, the municipality did not fulfill its commitments so its accounts were closed on the basis of SSO regulations,” Mohammad Hassan Zeda, SSO’s deputy for insurance and revenue affairs, told Fars News website.

He said the organization adhered to regulations concerning conditions of employers and assisted employers prone to bankruptcy.

SSO and TM had signed an agreement almost a year ago for clearing the latter’s debts, based on which the former was supposed to be reimbursed its money in installments of 1 trillion rials ($24.4 million) each beginning from the summer.

However, “TM only paid back a portion of its liabilities and did not cover the rest,” he said.

The SSO official said his organization has also held talks with the new executives of the municipality and conferred with the new deputies of Tehran Mayor Mohammad Ali Najafi, but nothing has happened yet, leading to SSO’s invocation of Article 50 to block TM accounts.

“These measures are completely based on the law and after TM was given ample opportunities to pay its dues,” he added.

He also notes that new negotiations are being held with TM executives to come up with a new timeline for clearing the debts.

To put matters into perspective, Zeda said SSO pays 40 trillion rials ($977.9 million) a month only in pensions and must have bigger means of financing.

That is while only a few days ago, the research arm of the parliament published its latest study to warn that SSO–the biggest fund in terms of members in both its pension account and health insurance services covering 42 million Iranians who constitute more than half the country’s population–is facing an acute budget deficit and needs immediate rescue and recovery measures.

“The probability of SSO’s financial collapse within the next decade is very high,” the Majlis Research Center declared in its study.

 New Finance Methods for TM

Meanwhile, TM executives held a brainstorming meeting with players in the capital market to evaluate investment opportunities in Tehran.

“We now face no other choice but to move toward new and diverse ways of financing in Tehran, including the employment of capacities in the capital market to direct the city toward using sustainable income sources,” Samiollah Hosseini Makarem, TM’s deputy for financial and economic affairs, was quoted as saying by the TM news portal at the meeting.

Makarem noted that the municipality made the bulk of its income through construction and city expansion schemes in the past decade, but as the Iranian capital now battles chronic traffic and air pollution while more than half a million residential units is currently vacant, this is no longer viable.