The main opposition spokesman for economic development Charles Mangion has urged the government to give clear explanations on how the government planned to pay back the €25 million being borrowed to set up the SVP.
The income of Malita was being guaranteed through two revenue streams together with an imposed annual expenditure on the government of between €5 million and €7 million over a term of 30 years. This was an increased burden on the Consolidated Fund.
A total of €198 million would be paid in 30 years together with an additional €70 million through revenue streams over the same period. Although the government was saying it was securitising income for the coming 30 years, in reality this income was being spent.
The government had resorted to this project to hide its debts and financial crisis. SPVs had originated as entities created by bankrupt companies to hide their financial situation.
Dr Mangion believed the government needed to present a clear picture of the situation before deciding on how best to proceed.
The company would need to be provided with an economic history in order to be able to trade on the Stock Exchange. The government was thus passing ground rents from Malta International Airport and the Grand Harbour to the company as revenue streams.
Dr Mangion said it was however unacceptable the properties would be transferred permanently to this entity, even after the emphyteusis came to an end. This went against public policy since a government property was never passed permanently to the private sector but only transferred on a temporary basis for the purpose of a commercial activity.
The government would hold 70 percent of the company with the remaining 30 percent being equity. The government needed to clarify whether this equity would be presented as stocks or include an element of risk and be presented as equity.
The memorandum needed to be amended to be in line with the resolution.
Dr Mangion repeatedly asked why the deficit and borrowing requirements of the government did not match. The minister had said that this was because at the end of the year the government borrowed more to meet the short-term treasury bills but that this would result in less debt in the first months of the following year. Dr Mangion asked why, year after year, this was never honoured.