The State Workers’ Social Security Institute (ISSSTE) has declared a state of “virtual bankruptcy” due to the high levels of debt and low liquidity left by the previous government.

The federal health service has debt of 18.91 billion pesos (US $990.7 million) and just 37 centavos available to cover each peso of liabilities, according to its 2019 financial report.

ISSSTE chief Luis Antonio Ramírez Pineda said the report is reflective of poor financial supervision, extravagant expenditure and “inadequate practices in purchases and tenders” during the previous federal government’s administration.

He also said that increasing subrogation liabilities and embargoes on ISSTE bank accounts holding more than 3.5 billion pesos contributed to the institute’s solvency problems.

Ramírez said liabilities increased by 53.5% under the previous administration, rising from 80.66 billion pesos to 123.8 billion.

Expenditure on personal and general services, materials and supplies increased to just over 111.2 billion pesos last year, a 6.1% spike compared to 2017.

Ramírez said that fees and contributions received by ISSTE have historically been insufficient to cover expenditure, forcing the institute to rely on government transfers.

“Even so, the institute still has a deficit,” he said.

ISSSTE ran a deficit of just over 14 billion pesos last year but that was partially offset by an 8.89-billion-peso cash injection from the government.

The institute’s pension fund reported income of 1.47 billion pesos but three-quarters of that amount was eaten up by expenses.

Source: Milenio (sp)