CM ‘ducking £300 million question’, GSD says

The GSD has again accused the Chief Minister, Fabian Picardo, of avoiding answering what he has done with the £300 million raised by “mortgaging” local government housing estates.

This comes amid an ongoing row between the Gibraltar Government and GSD Opposition over the handling of that £300 million financing package, which the government has robustly defended as a good deal for Gibraltar.

Roy Clinton, the shadow minister for public finance, said: “I am becoming accustomed to the Chief Minister avoiding answering any simple questions in respect of public finance such as what has he done with the net £275 million raised from the mortgage of six housing estates or even how he proposes to pay for the new schools for which only £1,000 was provided for in this year’s Budget.”

He added that Mr Picardo has now conceded that the £300 million is a “structured liability”, in other words a loan and thus not an “investment as he once claimed”.

“The Chief Minister cannot deny that if Gibraltar Capital Assets Limited defaults on its obligations the Government will de facto have to pick up the bill,” Mr Clinton said.

“This crushing debt burden will be borne by future generations thanks to this Government’s reckless thirst for borrowing none of which was mentioned in their 2015 manifesto.”

“The Chief Minister has also admitted that the 3% annual rent increase was part of the financial modelling underlying the financing deal.”

“This confirms what we were told at the meeting with his technical experts on 6 February 2017.”

Mr Clinton added that it is not insignificant because compounded over a 31-year period a 3% annual rent increase would result in £61.5 million of additional revenue to the company which would be needed to repay its debts.

“I have no need to lie or pretend otherwise and I challenge the Chief Minister to make public the private placement memorandum on the issue of the company’s loan notes as well as the put option agreement,” he said.

He repeated his call to Mr Picardo to explain what he has done with the £300 million.

“The people of Gibraltar deserve complete transparency on these important matters which the Chief Minister continues to refuse to provide.”

“The Chief Minister falls well short of what we should expect of a Finance Minister and I regret we will only know the whole truth once we have a change of Government.”