SPV guarantees financial sustainability, ‘far cry from hiding government’s debts’

Finance Minister Tonio Fenech introduced his resolution for the transfer of the Malta International Airport and Viset leases to Malita Investments plc - the special purpose vehicle that will finance the €80 million City Gate - as a long-term investment that would ensure financial sustainability.

"The SPV is a far cry from hiding government's debt: it's a method by which we are guaranteeing a timeframe by which the project must be repaid," Fenech said. "It is a long-term investment that will not give immediate return but is planning ahead for government's future finances."

Fenech said Malita may even be used to finance other projects such as the building of the MCAST campus, and new schools. "A special purpose vehicle sends a message of stability through established timeframes within which the project must be repaid. The SPV provides a mechanism to sustain the finances of the country."

Fenech's explanation of the SPV's alleviation of debts being passed on to the taxpayer did little for the Opposition, with  Labour MP Karmenu Vella reminding the minister he could not count on the PL's support.

Vella insisted that new Parliament House was not a priority and that "the majority of the Maltese did not support it".

"It is a capricious project which is seeing government spending €80 million to build something we do not need, while at the same time government is cutting down on the health budget," Vella said. "The project is not self-financing and it will remain as a monument to government's debt."

Vella said it would be better if the government worked on having "a serious, functioning parliament, rather than focus on building an aesthetically nice building."

Labour MP Helena Dalli - who also hit out at government over "its lack of priorities" - said a new Labour government would still honour the commitment undertaken by the administration and see through the completion of the project and its financing.

But Tonio Fenech rebutted Labour's arguments: "Sometimes I get confused by the Opposition's opinion on SPVs - on one hand they say they agree on the concept, but at the same time they do not agree it be used to finance the building of the new parliament," Fenech said, after listening to what Dalli, Vella and Labour MP Charles Mangion had to say.

He added that the Opposition was completely mistaken when it said that the SPV will be used because of Malta's critical financial position, disputing the depiction of a frail economy. Quoting from a report published today by the International Monetary Fund, Fenech said the IMF recognised Malta's "resilience" which reflected in the government's commitment to improve the finances, especially in external competitiveness.

Fenech said that the IMF also recognised the government's commitment in fiscal fighting to manage public debt, while it managed to narrow down the deficit to 3% of the GDP.

Malita Investment, a public company listed on the Stock Exchange, will be the new commercial entity that will run and finance Malta's costly parliament, the building re-imagined as part of the City Gate project by acclaimed Italian architect Renzo Piano.

Government will transfer the leases for the land and buildings of the Malta International Airport and Valletta Cruise Port (Viset) terminals, to the SPV that will sell shares to the public in a bid to finance the €80 million project.

Malita Investments plc will be owned by the government and its investment management arm, Mimcol. It has an authorised share capital of €150 million.

The company will receive the annual rents from MIA and Viset, which are run by private consortia, but it will also invest in local and foreign stocks and shares as well as issue bonds to the public, raising money for the City Gate project as well as running the project.