HomeLocal NewsGovt Psmas debt tops US$300m

Govt Psmas debt tops US$300m

AS Treasury continues to walk a fiscal tightrope, government’s debt to financially beleaguered health insurer Premier Service Medical Aid Society (Psmas) has nearly doubled to US$329 million this year from US$186 million in 2015 as the fiscal crisis deepens, Zimbabwe Independent can reveal.

By Hazel Ndebele

Psmas says government’s failure to settle its debt has crippled operations.
Psmas says government’s failure to settle its debt has crippled operations.

Zimbabwe is grappling with economic turmoil, with wages gobbling up 96% of revenues, thereby crowding out capital projects and social spending. The country is undergoing rapid de-industrialisation amid a wave of company closures and massive job losses. This has resulted in government revenues plunging.

According to senior Psmas officials who spoke to the Independent on condition of anonymity, the government debt has crippled operations at the medical aid society.

“Government currently owes us US$329 million and the private sector owes us US$20 million,” one source said.

“We appreciate that government at times tries to cover this gap in a tough economic environment, but the matter of fact is that the debt is seriously affecting operations as you know that the medical aid business is based on claims.”

Psmas has been struggling to settle claims with service providers as subscribers continue to get a raw deal. Investigations by this paper show that government was mainly responsible for Psmas’ mounting problems due to non-remittance of subscriptions, although corruption has also played a big role in throwing the company into turmoil.

Civil servants constitute the majority of the over 800 000 members of Zimbabwe’s biggest health insurer, which has branches across the country and the region.

Government is supposed to pay 80% of the contribution of each employee, while the worker foots the remaining 20% which is deducted from the salary for remittance to the medical aid society.

The debt has seen Psmas failing to run the society and adhere to the rules of medical aid funds.

Psmas communications and brand manager, Arthur Choga, confirmed the institution was owed by various stakeholders, although he declined to provide figures.

“Like any other organisation, we have a list of institutions and companies that owe us, but in the interest of corporate governance, we cannot discuss who owes us and how much they owe,” he said.

“We are engaging with those who owe us money to find an amicable way of resolving the debts.”

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