Government securing €1 billion in debt for parastatals
The government of Malta is securing just over €1 billion in loans and guarantees for corporations like Enemalta, the annual report by the Auditor General published today shows.
A total €1.03 billion in letters of comfort and bank guarantees may effectively translate into dues by government, should the companies call upon the government to make good for their debts.
The list of debts confirms claims by credit rating agency Moody's that Malta has 'weak debt metrics' even though officially, Malta's national debt is 68% of its gross domestic product, less than the EU average of 85%.
On its own Enemalta accounts for over 56% of this debt: between 2009 and 2010, Enemalta's liabilities increased from €448 million to €579 million. This was due to guarantees from government to secure loans to finance the energy company's investments in the national electricity supply and distribution network, and its interconnector to Sicily.
The Malta Freeport Corporation on its part has €212 million guaranteed by the government, as part of a currency swap: the exchange of USD250 million in bonds into a euro denomination.
The Water Services Corporation has €89 million in loans guaranteed by government, which includes a foreign loan for investment in wastewater collection and treatment.
Of the total billion in guarantees, €482 million includes loans from foreign entities.
Apart from this €1 billon in guarantees on public corporations' debt, Malta also is committed to €400 million in guarantees on external debt tied to the European Financial Stability Facility (EFSF) and another €74 million bilateral loan to Greece.
Technically, all the loans taken out by these corporations have to be paid back - if not, it will be the government that will have to back up these debts. Until then, this potential or contingent debt is not added to the cumulative deficit.