Govt hits back at GSD debt claims

The Gibraltar Government has hit back at GSD claims that its £300m estates financing deal has pushed public debt to more than £1.1bn.

In a statement, the government reversed the claim and said the GSD would have driven debt to £1bn had it been elected into office.

In contrast, it said the GSLP/Liberals had reduced gross public debt in cash and GDP ratio terms.

The government added that the £300m deal – which it describes as “institutional investment” as opposed to the GSD’s reference to it being “a mortgage” – was good value for Gibraltar.

“The financing transaction proposed by financial expert Albert Mena, the Financial Secretary, and on which Peter Montegriffo QC, the founder of the GSD, has advised the Government, is an excellent deal for Gibraltar,” No 6 Convent Place said.

The government said the deal was in the company structure which had “no real debt” at the time the GSLP left office in 1996 but which had accumulated nearly £200m in GSD debt by the time of the election in December 2011.

It said that at the time of that election, the GSD had a commitment to increase company debt by at least another £150m for its diesel power station, including increasing electricity prices by 100% over 20 years.

According to the government, that GSD company debt would have been in addition to the over £500,000 which the GSD administration had accumulated in public debt.

“As a result, the position inherited by the GSLP/Liberals in 2011 was a billion pounds of debt if the debt and commitment to debt of companies was included in the calculation as the Opposition now, contrary to the rules on public finances, wants to do.”

“Indeed, the GSD fought the 2015 election arguing that they would raise the debt ceiling to £900m.”

The GSLP/Liberals government has in fact reduced the gross public debt in cash and GDP ratio terms and has now entered into an excellent financing arrangement which is not public debt and is at historic low rates.”

The government also dismissed GSD suggestions that the rate it had secured for the £300m financing – 3.85% over 30 years – could have been even lower since the deal was signed.

It said the Bank of England’s overnight borrowing rate had no bearing on the composite rate for 30-year borrowing, adding that the rate it had secured in the run-up to the June 23 referendum on EU membership would have “increased and not decreased” given the uncertainty that Brexit now brings to the UK and Gibraltar.

“[Opposition leader Daniel] Feetham and [GSD MP Roy] Clinton are political ostriches that have their heads buried in the quick-sand of the GSD's shameful debt history,” said Chief Minister Fabian Picardo.

“They want to ignore the huge debt created by the GSD in the Government company structure and the huge debt in the public finances of Gibraltar that they created.”

“They want to pretend company debt started the day I became Chief Minister.”

Of the £300m deal he added: “I have cut the public debt and I have worked - with the advice of Joe Bossano, Albert Mena and Peter Montegriffo, QC - to refinance the company debt at historic low rates under a very strong board of directors made up of James Levy QC, John Collado and Charles Serruya.”

“It is the right deal, based on the best advice and in the best interests of Gibraltar.” “Endless Feetham sniping won't change that.”

“Objective third parties are congratulating us for an excellent deal.”

Mr Picardo said the GSD had been “aggressively” seeking to sell Gibraltar’s post-war housing stock, whereas that was no longer the case.

“Mr Feetham and Mr Clinton are pretending that the world before 2011 was all rosy, when it was actually a time when they hugely indebted Gibraltar in its public finances and in its companies,” he said.

He added that his government was “sorting out” the debt position it had inherited by “prudent investment, wise restructuring of borrowing and careful spending” while growing the economy and reducing debt in cash and in GDP ratio terms.

“The Opposition’s scaremongering isn't working now, as it didn't work before the election,” Mr Picardo said.

“The public can see that the Opposition are ready to talk Gibraltar down and to criticise for the sake of criticising. The demagoguery will get them nowhere.”

“We will continue to invest in our nation and our people and we will continue to seek to deliver more effective and more efficient public services.”