The government plans to clear over 60% of its debt to the Social Security Organization (500 trillion rials or $12 billion) through a debt swap deal, the deputy minister of cooperatives, labor and social welfare said.
“The debt is set to be swapped with the SSO-owned Bank Refah Kargaran’s dues owed to the Central Bank of Iran,” Ali Sarzaeem also told IRNA, emphasizing that this means “no payments are going to take place”.
Considering that the total debt figure of 800 trillion rials is almost half the figure quoted in the latest reports, Sarzaeem clarified that the smaller amount is what the government officially recognizes as its debt to SSO.
The Ministry of Economic Affairs and Finance said in mid-March that SSO is the biggest creditor of the Iranian government, as the organization accounts for 33% or 1,500 trillion rials (about $33 billion) of the government’s total debts.
Islamic Treasury Bill holders, CBI and public and private banks are the next four biggest government creditors, according to Economy Ministry reports.
Sarzaeem added that the planned swap will not bring about any “significant” breakthrough for SSO’s crisis-stricken pension funds.
There are 24 pension funds in Iran, which are divided into public pension funds (Social Security Organization, Armed Forces Pension Fund, Civil Servants Pension Fund and Rural and Nomadic Insurance Fund) and exclusive funds (pension funds for the employees of Islamic Republic of Iran Broadcasting, oil industry, banks, Central Insurance of Iran and municipalities).
SSO is the largest pension fund in Iran, which pays up to 50 trillion rials ($1.19 billion) in pensions every month. The rising number of retirees and faltering returns from its investments, however, are pressuring the organization and have compelled it to sell its assets to keep up with the surging pension payout.
SSO’s support ratio is now four, and that of Civil Servants Pension Fund–the next biggest–is below one, according to Mohsen Izadkhah, a researcher at the Institute of Religion and Economic Studies.
Alarm is raised when the ratio reaches six, as a fund cannot practically stand on its own feet and has to receive external help.
