National Housing Trust head office in New Kingston - File

Susan Gordon, Business Reporter

Government's debt for unpaid NHT contributions continue to grow, and has reached $8 billion, despite a commitment to clear the arrears built up over six years.

In a deal reached with the National Housing Trust, the Government has commitment to pay off a portion of the liabilities by swapping land, but so far only about 10-15 per cent of the $6 billion it owed last year has been cleared, according to NHT managing director Earl Samuels.

The arrangement covered 3,000 acres of which 1,000 had been transferred when the Financial Gleaner first reported on the swap last year, but no accompanying cash payments.

But in the space of a year, the principal debt owed by the state for unpaid contributions to the trust has climbed by $2 billion. Interest penalty applicable to outstanding contributions accrue at a rate of 40 per cent per annum, but the Financial Gleaner got no definitive answer as to whether the Finance Ministry would be required to pay interest on the debt.

The state's liability now equals the investment NHT makes each year in housing (2006: $7.7 billion).

It's a breach of the law not to pay over contributions annually to statutory agencies, but central government is currently in a cash bind and running a budget deficit of more than $30 billion.

Last year, the Government offered up parcels of land mainly in Hanover and Trelawny as a means of reducing its $6 billion debt to NHT.

"It is an ongoing process" Samuels said, in response to whether a timeline was agreed for government to clear the arrears."No monetary considerations have been made."

The NHT boss noted that in the past government had cleared some arrears by issuing bonds to the Trust, but not this time.

"We have not received any other form of payment other than land."

Samuels insists the $8 billion debt will not adversely affect NHT's operations, saying the agency had enough resources to meet its financial obligations to its contributors.

A month ago, Samuels told the Financial Gleaner that NHT's total investment portfolio stood at $20.8 billion, and that the pool was sufficiently liquid to finance its cash flows.

"We have adequate funding. We have no cash flow problem," he said.

That pool of funds, he said, is not to be confused with the Housing Fund, which currently stands at about $45 billion.

NHT's primary sources of income are from mortgage loan repayments, a combined five per cent of payroll contributions from employer and employees, and its inhouse investments. Major expenditures are from new loans, developers' financing, NHT payments of refunds on employee contributions and its own development projects.

"We have never denied payment to contributors," said Samuels.

susan.gordon@gleanerjm.com