Jan 20 - Government “Wishes To Distract From Economic Realities” Says GSD
The GSD says it notes what it calls the “extraordinary reaction” from No. 6 Convent Place to the Leader of the Opposition’s New Year Message. The party says that the response “betrays a nervousness that simply reinforces valid concerns by people” as to the Government’s management of the public finances of this community. It is also understandable, says the Opposition, that there should be those concerns when, according to the Chief Minister, “we went from financial ruin to the land of milk and honey in only a few months after the last General Election with the Government spending money as if it were about to go out of fashion.”
The GSD argues that that spending has been funded by the highest net debt this community has ever had at £372 million and very significant additional off balance sheet debt in the form of £400 million invested by the Gibraltar Savings Bank (“the GSB”) in Credit Finance Company Limited which debt the Government guarantees but which is not reflected in the public accounts.
It is vital that people understand, argues the Opposition, that the Government could not have borrowed in its own name another £400 million in addition to amounts it has borrowed directly (i.e. the £372 million net debt) because the borrowing limits set by law would not have allowed them to do so. By using Credit Finance Company, says the GSD, the Government is “circumventing legal mechanisms” in place preventing any Government from borrowing in a manner that becomes “unaffordable” for Gibraltar. According to the party, the Government can only do that because the £400 million in Credit Finance is monies owed by GSB and not the Government, but of course, the Government guarantees repayment of that money if GSB defaults.
The reason why the Government is taking this “huge gamble” in using monies in the GSB, says the GSD, is that the GSLP-Liberals made so many promises at the last election that were “never affordable or fundable by conventional means”. It was not possible, says the Opposition, to fund £750 million in capital projects while at the same time cut public debt by half, cut income tax, freeze rents, rates and electricity and donate every penny of Government surplus to Community Care.
The GSD says that this is “not a viable or sustainable economic model and it places the political and economic stability of our community at great risk.”
