What’s with the SSIF?

As if wishing to reverse Jordan’s privatisation policy, not a day goes by without news of the government offering to buy the stocks of one company or another.

However, the news, which used to highlight the role of the Social Security Investment Fund (SSIF) in a deal, now does not mention it anymore, leaving room to much speculation as to the sources of funding.

Having the SSIF move in to buy back stocks and securities upon government instructions is not wise in many respects; it is even dangerous, as it signals collusion between the government and the “independent” SSIF.

My interest was piqued by an article by a Jordan Times colleague last week, which asserted, based on the Audit Bureau Annual Report, that several state-owned agencies are defaulting on their loans to the SSIF.

One example is the JD43 million default by the Housing and Urban Development Corporation (HUDC), which was supposed to be repaid by November 2011 with an interest rate of 8.5 per cent but is not paid yet (the interest on the loan amounted by the end of 2014 to 29 per cent of the value of the loan).

Another startling example was a loan of JD46 million that was extended to Al Daman for Development Zones Company, a private company owned by the SSIF, to buy property in Amman in April 2010. The company, the article said citing the report, “resold the property to the government but never paid back the loan to the SSIF”.

According to the SSIF, it “is not a government entity and its investment decisions are made on risk — return/profit-loss basis”, and it is supposed to “minimise the investment risks of the portfolio through diversification of assets”.

Strangely, its website only contained annual financial statements until 2011 in the English version; the Arabic version contained much more current information; it has financial statements up to 2013.

According to the Arabic website, the SSIF loaned the government about JD2.7 billion in treasury bonds and other loans; that is a lot of lending to one source: the government.

The SSIF is reportedly interested, at the behest of the government, I believe, in buying back stocks of privatised companies, such as the Jordan Phosphate Mines Company and others.

Does this mean that it will pay much more than the stock was sold for?

Is it involved in the recent decision to inject capital into the Royal Jordanian?

Does it mean that the Jordanian privatisation drive was faulty and should not have happened?

Is the SSIF really capable of making decisions independent of government? 

I find the questions puzzling and the fact that the SSIF is not collecting on government faulty debts to be an indication that the SSIF may not be so independent after all.

If it is not, then it should quickly assert its independence once again.

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