Development Bank and Social Security Fund Financial Collapse Averted, Says PM Drew

The present government administration has rescued the Development Bank of St. Kitts and Nevis from the brink of collapse, Prime Minister Dr. Terrance Drew has revealed.

Prime Minister Drew, who is also the Minister of Finance, disclosed that imprudence at the Development Bank, by the previous administration, led to the ‘hemorrhaging’ of the St. Christopher and Nevis Social Security Fund.

He also assured the public that interventions performed by his administration have since led to the stabilization of both institutions.

Dr. Drew, while giving an overview of the financial affairs of both institutions, made startling revelations about a loan the Development Bank took from the Social Security Fund and the Bank’s failure to effectively service the loan.

“The Development Bank owes Social Security $119,921,959.78, almost $120 million owed to the Social Security. None of this money was borrowed under the new administration. This is what we met. The last time any money was paid to Social Security under the former administration was January 2022 and the amount paid was a meager two hundred thousand dollars ($200,000). So, between January and August, not one cent was paid to Social Security for the $120 million…The amount that Social Security is supposed to be paid is six hundred and ninety-seven thousand ($697,000) per month but they were paying $200,000 – less than one-third – to service the debt, and in addition to that the last time anything was paid was January 2022,” Prime Minister Dr. Drew reported.

The Minister of Finance said his government immediately performed interventions to avert financial collapse of both institutions.

“We started to pay right away from September, and we started to pay the $200,000. Again, Development Bank had no money. The bank was on the verge of collapse. I couldn’t say that to the country [then] for people to lose confidence and run on the bank and basically sink the bank. That would have been the worst scenario. I had to put the country’s interest above immediate political interest or any other interest. The immediate interest was let us save Development Bank and so we started to make moves to save Development Bank,” Dr. Drew reported.

In June 2023, the Government increased its payment to Social Security to $250,000, and according to the prime minister, the payments will be increased further to $300,000 per month.

Prime Minister Drew also confirmed that his administration was seeking outside advice to ensure both institutions can have long-term stability.

“We are now presently doing a review with Deloitte out of Barbados so that we can get a plan of how we can restructure things and make sure that the bank continues to be very solid. At the end of the day, Social Security must get back its money. Social Security cannot afford to lose $120 million. People save their money at Social Security through an Act; they do it for when they would have retired or any other circumstances under the Act, such if they get pregnant, if they become disabled, sick leaves, and so forth, they expect Social Security to be there,” PM Drew outlined.

He emphasized that his administration will continue to advocate strongly for accountability and transparency with the ‘people’s money.’

“This money is serious money that belongs to the people, so when I tell people we had to act to save Social Security this is what I was talking about. I was not going to come out with the information before we had done the proper analysis because as I said I am not on a witch-hunt, but the people deserve to know the truth,” Dr. Drew stated.

His remarks came as he provided insight on matters of public interest on the Freedom FM Radio program ‘Issues’.

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