Valletta fund raised in Parliament

Finance Minister Tonio Fenech told Parliament yesterday that in the case of the Valletta Fund Management, one would have to analyse the assessment by the Malta Financial Services Authority in its investigation and see what decisions were taken and what their implications would be. He said that the MFSA had to analyse and ensure that the steps taken by the VFM were correct and that the best interests of investors were safeguarded.

Mr Fenech was replying to opposition finance spokesman Charles Mangion’s remarks on the issue when he was winding up a debate on an International Monetary Fund resolution.

He said it was difficult for him as a politician to comment on the MFSA investigation. It was best to wait for the authority’s findings to ensure that the truth emerged and that investors were safeguarded when decisions were taken. However, every investment carried a risk and it was the investors’ responsibility to understand the risk they were taking.

He said it was not prudent at this stage to make further comments.

Turning to bank service charges, Minister Fenech said that banks usually supplemented low interests with charges on the services given. Dr Mangion’s remarks on the subject were valid and banks had to seek a balance between interests and service charges.

He encouraged investors to borrow from an increased number of financial institutions. On the other hand, financial institutions had to understand the economic importance they had, particularly for charges on loan facilities.

Introducing the debate on the International Monetary Fund motion, Mr Fenech said that the IMF had intervened in the recent global financial and economic crisis and given back stability to such countries as Ireland, Greece and other East European nations for better facilitation of the financial global system.

He explained that the motion, which was technical in nature, aimed at giving emergent market economies a greater level of participation in decision-making while also modernising the administrative structure of the Fund.

Participation of countries was being aligned to their relevance within the IMF. Quota and voting shares for such countries as China and Turkey were to increase. Malta was marginally involved in the quota share, with its share decreasing from 0.047 to 0.043 per cent. Malta’s voting share in the new mechanism was to be 0.07 from 0.57 per cent. This meant that Malta’s quota in monetary terms was to decrease by approximately €8.8 million.

In modernising its administrative structure, the IMF was setting up a financial endowment to make investments according to cautious regulations. This made the Fund’s established sources for finance less dependent on governments. These regulations had to be approved by 70 per cent of IMF members. Minister Fenech explained that the implications for Malta were limited and did not put the country at risk. The European Union also supported the IMF ­resolution.