The special purpose vehicle proposed to finance the City Gate project is expected to make an annual profit between €7 million and €10 million with the lion’s share going to government coffers.
Finance Minister Tonio Fenech revealed the projection this afternoon in the course of a debate on Malta and the financial crisis with his Opposition counterpart Charles Mangion. The debate was chaired by Laurence Grech.
Parliament is set to vote on the government’s SPV proposal next Wednesday. The proposal has been criticised by the Opposition on a number of counts.
Most vehement criticism has centred on the plan for government revenue from Malta International Airport and VISET being diverted to the SPV for several years.
The SPV, Malita Investments, will be 70 per cent government owned, with the remaining 30 per cent open to individual shareholders.
Mr Mangion reiterated criticism this afternoon, saying that the revenue diversion, when coupled with the cash injection due to Malita and the yearly rent it would charge the government for using parliament, meant the SPV concept was flawed.
But Mr Fenech insisted that the SPV would be borrowing cash at lower interest rates than those the government borrowed at, and that the SPV would ensure the City Gate project was financed in full rather than buried as part of government debt.
The minister chastised the Opposition for the way in which they criticised government policies. Constantly talking about economic problems would scare off investors “and then you [the PL] will become the answer to your own prayers”, he warned.
Mr Mangion soon shot back, saying that burying one’s head in the sand served little purpose. “How can you heal a patient unless you diagnose them first? Investors come across problems first-hand, not talking about them isn’t going to solve anything.”
The two clashed over economic policy. Mr Mangion argued that EU-wide recession policies so far had given too much importance to austerity measures as opposed to GDP growth: the minister insisted that growth needed to be sustainable, and that the financial crisis had dispelled the myth of governments being “too big to fail”.
And the debate ended with a sting in its tail, with Mr Mangion saying national instability was being exacerbated by the government’s reluctance to set electoral timeframes and the minister rebutting with a swipe of his own.
“Investor uncertainty is down to their fear of a Labour government. The PN has always been pro-business, so investors know where they stand with us.
What Franco Debono does is of little interest to investors. But nobody knows what the PL’s economic plans are – that’s what creates instability. The PL should put forward more facts and less political clichés,” Mr Fenech said.
Mr Mangion’s reply was curt. “Name an election date, and we’ll publish our economic plans”.