Feb 07 - Government Must Be Held To Account For All Expenditure Says Hassan Nahon
Independent MP Marlene Hassan Nahon has said that it is of “paramount importance” to hold Government to account on all its expenditure, whether or not the funding for this expenditure emanates from traditional Government revenue sources or otherwise.
The statement came following a meeting yesterday at Number Six between Ms Hassan Nahon, the Chief Minister and his team to explain the terms of a £300 million loan secured on six Government housing estates.
A statement continued: “I am thankful to the Chief Minister and his team for taking me through the £300 million loan in detail. There are many pieces of this deal that are commendable, including the pre-Brexit timing providing attractive borrowing rates to the Government, the long termism of the institutional investors who have traditionally not lent in Gibraltar, and the fire-power in £300 million of capital available to Gibraltar for when markets may not allow to borrow so easily.
“The Government have advised that it has received opinions demonstrating that this loan is not classified as public debt. The Government however is bearing most of the risks associated with this borrowing and ticks the box of every conventional definition of public debt:
- Is it structured and managed by the Treasury? YES
- Is it collateralized on Government owned property? YES
- Is the servicing of the debt the responsibility of, and undertaken by, the Government (via public companies)? YES
- Are the proceeds of the loan controlled and spent by Government officials? YES;
- Does the loan carry an implicit or explicit Government guarantee? YES
“Classification as public debt is important as there are laws governing public borrowing which in turn control the risk Government takes in its expenditure. I do not want to see the floodgates open for future Governments to borrow, perhaps recklessly, outside of public scrutiny and spend this borrowing in essence through a parallel Government.
“Any government, and most of all a government elected on transparency, would want to provide its people with meaningful and accurate information that is actionable and relevant. Public debt numbers are an attempt to assign responsibility, putting the Government on the hook for implicit liabilities. We need to ensure that all Government liabilities and guarantees are subject to the same degree of scrutiny through the budget process and local laws as other spending.
“Clarity and transparency on the public-sector finances has never been more vital in the context of recent concerns over public sector debt. With no law to constrain Government on how its spends the £300 million of loan proceeds, Parliament and the people of Gibraltar need to ensure this capital is not spent on ordinary Government expenditure or manifesto promises, that otherwise would be covered by ordinary Government income. The Chief Minister has assured me that this will not be the case with the £300 million loan proceeds.
“However, for reasons of transparency, I urge the Government to make disclosures to ensure that a broad range of information on public sector liabilities, obligations, contingencies and spending are readily available, whether or not included within balance sheets.
“It is of paramount importance to hold Government to account on all its expenditure, whether or not the funding for this expenditure emanates from traditional Government revenue sources, or otherwise.”
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