Labour leader should explain his solution to Enemalta debt - minister

Finance Minister Tonio Fenech played down claims by Opposition leader Joseph Muscat that a €50 million loan taken out on the national debt would appear on Enemalta's existing €700 million debt.

In comments to MaltaToday, Fenech said that the Labour leader had to explain how he was expecting not to pass on the capital investment Enemalta was undergoing into the tariffs for the energy it produces.

"Muscat confuses basic tenets of accountancy. He says he disagrees with Enemalta incorporating its rate-on-capital-employed into its tariffs, which is the revenue it requires to pay back its capital investment. A normal company performs big investments by loaning the money from a bank, then raising its tariffs gradually over 20 years to recoup the money it loaned.

"This is what Enemalta is doing to pay off its interconnector with Sicily. The question is, how would Muscat raise the revenue he needs for Enemalta?"

Fenech also insisted that Enemalta's revenue remains independent revenue, when asked whether all debt incurred by the energy corporation is guaranteed by government.

"Enemalta is an independent entity, and in the EU's official statistics this debt does not get added to the national debt. If Muscat is going to pass on Enemalta's debt onto people's taxes, he should tell us exactly what he is going to do."

Fenech also defended recent data which, although showing Malta emerging from its recession with 0.9% growth in the last quarter, saw household consumption decreasing as well as compensation of employees falling across seven out of 10 industries listed in the NSO data.

"The average was increased by 3% and it is good to remind people that two days before the official statistical release, Labour MEP Edward Scicluna wrote in the newspaper saying that Malta would not come out of the recession.

"The truth is that Malta's economy grew and new jobs have been created. We have the fifth lowest unemployment rate in the EU, which shows that Malta is performing well," Fenech said.

The latest GDP data for the April-June period shows that domestic demand, which comprises consumption by households and government, and investment fell by 1.5%, continuing from falls of 1% in the first quarter of 2012 and 0.2% in the last quarter of 2011.

Consumption trends for local households, after growing by 1.1% in Q4 of 2011, fell by 2.3% in Q1 of 2012, with the decline steepening further in Q2 to 3.2%. Growth in compensation to employees slowed down to 2.6% in Q2 of 2012.