Cox: Divestment way forward for NIS

A “WELL-DIVERSIFIED INVESTMENT” portfolio.That’s what Winston Cox, a top economist and a former Central Bank of Barbados governor has insisted was needed by the National Insurance Scheme (NIS) to preserve its strong financial health over the long haul.By “diversified”, Cox meant a mix of foreign and domestic investments whose returns would boost NIS’ assets and provide it with the funds to meet its long-term obligations to Barbadians.“The NIS must have a well-diversified portfolio of investments,” said Cox, who stepped down at the end of last month as the Caribbean’s executive director of the Inter-American Development Bank in Washington.“Some of those investments should be Government paper,” he added.Having a lopsided portfolio overloaded with a particular set of investments would result in steep NIS losses if the scheme, for example, had too many United States equities and certain US financial instruments over the last two or three years, Cox said.However, the former central banker supported an NIS investment strategy that included but was not exclusively reserved for Barbados Government treasury bills.“I do not think that the use by the Government of the surpluses of the National Insurance to finance Government investments is a terrible thing,” he insisted. “It is a necessary thing and it should be a part of the NIS portfolio. But it shouldn’t be the only thing in the NIS portfolio.”Cox said the NIS should have the same market access to Government assets as any other investor. He stressed also that the NIS should not be required to make Government investments “that other people are not willing to make”. “There was a time long ago when there were things called ‘special issues of treasury bills’ which were only taken up by the NIS.They are things of the past. The NIS goes into the financial market like any other investor to buy Government paper.” (TB)