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Jul 24 - Opposition Say They Will Continue To Scrutinise Savings Bank “In a Calm and Measured Way”

GSD GibraltarThe GSD say the latest statement by the Chief Minister on the Gibraltar Savings Bank (“the GSB”) shows that he is becoming increasingly erratic. The GSD statement continues:

His statements are peppered by irrational angry insults levelled at the Leader of the Opposition.  The statements by Mr. Picardo that he is the most successful Leader of the Opposition in history because the GSLP-Liberals won a General Election after six months of him becoming Leader of the Opposition and that Mr. Feetham is the least successful because his party lost a by-election four months after taking the same position, is childish.

What the Opposition cannot do is refrain from dealing with issues of real public importance because it is concerned with being sucked into a spiral of negativity entirely of the Government’s own making.  We have a duty to hold the Government to account and we will continue do so in a calm and measured way.     

The manner in which the Government is using the money of the GSB debenture holders and the way it attempted to keep that secret is such an issue.  It is simply not true that the GSLP-Liberal Government is doing what the GSD Government was doing.   When the GSD was in Government, money deposited with the GSB had to be invested according to the Gibraltar Savings Bank Act in cash deposits or their equivalent in order to protect their capital value (i.e. very safe forms of investments).  In March of last year, the Chief Minister amended the Gibraltar Savings Bank Act and took out that requirement.   

For months now we have been saying that we suspected the Government was intending to use savers’ money in order (amongst other things) to provide loans to third parties. That had been repeatedly denied by the Government. What the Government was, of course, doing was investing £303 million of monies deposited in the GSB with Credit Finance Company Limited and then using that company to loan money to third parties! 

The problem that the Government has, as the Leader of the Opposition demonstrated during his Budget speech (now posted on www.gsdlive.gi), is that in its manifesto, it promised many millions in capital projects and has increased recurrent expenditure sharply in just 18 months in office.  To boot, every time it invites the transfer of Government Debentures to the Gibraltar Savings Bank in a meaningless exercise to reduce gross public debt, it has to use cash reserves to do so.  That means it is reducing its own liquidity and its ability to fund its many election commitments.  It, therefore, has to resort to using savers’ money in order to fund its manifesto commitments. 

We have ourselves said that deposits with the GSB are guaranteed by the Government.  That does not make their use in this way any more acceptable.  Before the amendments to the GSB Act last year, all deposits were backed up with very safe investments that were either immediately available when a debenture had to be repaid to the saver or matured at the same time.  The position we now have is that in five or ten years’ time, when the GSB has to repay a debenture holder, that money will have to be found from somewhere and if some of these risky investments that the Government is now investing in do not bear fruit, the tax payer will need to foot the bill.  It does not take a rocket scientist to point out that this could have huge consequences for the financial viability of this community and completely distorts our public finances because these liabilities do not show in the estimates of Revenue and Expenditure, debated at Budget time. 

The GSD Opposition will not be deterred from doing its duty and bringing these issues to the public domain.  Indeed, had we not been vigilant and had the Leader of the Opposition not pursued this matter with the vigour that it deserves, it would not have come to light.  If these contingent liabilities become a millstone around the necks of future generations, we know that we have done everything we can to bring scrutiny to bear on the Government.