The government had only now come forward to discuss the Special Purpose Vehicle in Parliament because it was obliged to do so, since the setting up of this SPV was decided by the government alone.
Opposition spokesman on finance Karmenu Vella said it appeared Minister Fenech didn’t want to hear that this SPV had been set up to hide government debt, by transferring it to other instruments. In fact, many professionals were extremely sceptical about this SPV.
According to the Maastricht Treaty, debt should be no more than 60 per cent of the GDP of a country. Notwithstanding, Malta’s debt stands at 72 per cent of the GDP and the government continued to try to hide this problem. Malta had three debt pillars: that accrued directly by government, that by its entities and now by this SPV.
“Although last week Mr Fenech said it was not difficult for the government to borrow money I beg to differ, as the EU has warned Malta not to indebt itself further and we need to be careful what we borrow for,” Mr Vella said. Instead of controlling debt the government continued to increase it. He said that the fact was that while debt increased by more than eight per cent, the GDP had only increased by two per cent – a sign the country was borrowing far more than it could pay.
Although setting up this SPV was not illegal, the government was choosing the route which would get around indebting itself further. In the long run, this would cost more.
Mr Vella said if a similar move had been made to help a company like Air Malta, for example, the PL would never have opposed it. Similarly if it had been for restructuring Enemalta’s debt, he said.
The fact was that the government said the EU had agreed with this SPV, but it was the EU which forced a €40 million cut in the last budget, to bring the deficit to below three per cent. Furthermore the 3.7 per cent interest rate at which the EIB loaned the government €40 million was not so impressive, since local banks loaned the government at even 2.8 per cent interest.
The role of the Governor of the Central Bank was, in some cases, strictly advisory but the truth was that he could not be ignored when giving advice on such matters.
Mr Vella insisted that this would burden future generations with more debt, and went against all sense of sustainability, for a project which was not a priority. The fact was that nobody had said the building of a new parliament was necessary as the current one was not serving MPs well. Excuses such as tourism and democracy had been given.
The project was capricious, which was why the government did not find the people’s backing. At a time when less was being allocated to health and education, it was futile to say that for the first time the people would have its own ‘home’. If this is being leased, it did not belong to the government.
The opposition was voting against this motion not because it disagreed with SPVs, but it did not feel that it was being used for genuine aims but to hide debt and this was something which should be explained to the people.