Maltastar
The Minister quite often mentions Lm40 million for the 40% stake. Yet writing in the Sunday Times on 5th May he said the MIA has been capitalised at Lm70 million. 40% of this amounts to Lm28 million.
So we still do not know whether the sale price of 40% of MIA is in fact Lm40 million or Lm28 million. Unofficial sources indicate that Lm28 is much closer to the truth and the remaining Lm12 are a composite of distribution of accumulated profits, taxes on sale to government of immoveable property and advance payments of the leaseback for several years.
Even at Lm28 million the price is still quite respectable considering that I had valued the same 40% at Lm12 million when labour government was planning to privatise 40% and holding on to 60% as controlling shareholder of MIA.
So it’s quite useless for John Dalli to defend himself from criticism that was never made. I have criticised the MIA deal on the way it was structured permitting the 40% acquirer to eventually acquire 50% plus of the company and meantime being given the facility to take full control of MIA.
Chewing his words to make them barely understandable during his soliloquies on Bondi+ last Tuesday Min Dalli admitted that the airport management will now be in the hands of the acquiring consortium. You can rest assured that the consortium will charge MIA handsome management and technical fees. With 40% equity the consortium has been put in a position to cream off the bulk of the operational profit of MIA. So if Min Dalli got much more than I had opined in 1998 it is only because he as the vendor in representation of the Malta Government has conceded much much more than Labour ever contemplated to concede.
Some other interesting numbers were published this week relating to government’s financial performance during the first 4 months Jan – April 2002. These numbers, whichever way you look at them, are very disquieting. I have reproduced them in table form and compared them to the same period of 1998 under a Labour government so that one can reach conclusions on the sharp and grave deterioration in national finances.
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· Deficit for the 4 months is up from Lm22,099,000 in 1998 to Lm53,294,000. This is a like for like comparison with grant revenue taken as ordinary revenue.
· Revenue from taxation increased by Lm51 million in these 4 months but expenditure increased Lm78 million and hence why the fiscal deficit widened. Our taxes, heavy and unsocial as they are, are not keeping up with government’s expenditure especially now that government has been forced to pass through the Consolidated Fund expenditure formerly hidden in the Treasury Clearance Fund.
· Public Debt increased by Lm366,785,000 million up 54% from Lm682,350,000 in April 1998 to Lm1,049,135,000 currently. If one adds to this debt increase the one off privatisation revenues of Maltacom (Lm35 million) and Mid-Med Bank ( Lm82 million) this means that in 4 years the finance gap was Lm483,838,000 just Lm16 million short of half a billion. Half a billion increased debt/privatisation revenues in 4 years is nothing short of economic vertigo.
Thankfully the savings habits of the population and their deep trust in the financial system has facilitated financing of this borrowing requirement internally. Indeed foreign debt has reduced.
This is good as long as it lasts. But can it be expected to last if government keeps amassing debt at this horrendous rate and simultaneously disposing of the family silver diluting the backing for the increasing burden of the debt? If the government keeps abusing the trust of the people in the financial system it is risking a sudden strap bringing on to us an economic avalanche.
Nobody has yet criticised Min Dalli for under – selling MIA the same way he under-sold Mid-Med Bank. This can hardly be otherwise as so far nobody knows ( except the inner few) what price has actually been negotiated for sale of 40% of MIA.
“Chewing his words to make them barely understandable during his soliloquies on Bondi+ last Tuesday Min Dalli admitted that the airport management will now be in the hands of the acquiring consortium”
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So we still do not know whether the sale price of 40% of MIA is in fact Lm40 million or Lm28 million. Unofficial sources indicate that Lm28 is much closer to the truth and the remaining Lm12 are a composite of distribution of accumulated profits, taxes on sale to government of immoveable property and advance payments of the leaseback for several years.
Even at Lm28 million the price is still quite respectable considering that I had valued the same 40% at Lm12 million when labour government was planning to privatise 40% and holding on to 60% as controlling shareholder of MIA.
Chewing his words to make them barely understandable during his soliloquies on Bondi+ last Tuesday Min Dalli admitted that the airport management will now be in the hands of the acquiring consortium. You can rest assured that the consortium will charge MIA handsome management and technical fees. With 40% equity the consortium has been put in a position to cream off the bulk of the operational profit of MIA. So if Min Dalli got much more than I had opined in 1998 it is only because he as the vendor in representation of the Malta Government has conceded much much more than Labour ever contemplated to concede.
Some other interesting numbers were published this week relating to government’s financial performance during the first 4 months Jan – April 2002. These numbers, whichever way you look at them, are very disquieting. I have reproduced them in table form and compared them to the same period of 1998 under a Labour government so that one can reach conclusions on the sharp and grave deterioration in national finances.
· Deficit for the 4 months is up from Lm22,099,000 in 1998 to Lm53,294,000. This is a like for like comparison with grant revenue taken as ordinary revenue.
· Revenue from taxation increased by Lm51 million in these 4 months but expenditure increased Lm78 million and hence why the fiscal deficit widened. Our taxes, heavy and unsocial as they are, are not keeping up with government’s expenditure especially now that government has been forced to pass through the Consolidated Fund expenditure formerly hidden in the Treasury Clearance Fund.
· Public Debt increased by Lm366,785,000 million up 54% from Lm682,350,000 in April 1998 to Lm1,049,135,000 currently. If one adds to this debt increase the one off privatisation revenues of Maltacom (Lm35 million) and Mid-Med Bank ( Lm82 million) this means that in 4 years the finance gap was Lm483,838,000 just Lm16 million short of half a billion. Half a billion increased debt/privatisation revenues in 4 years is nothing short of economic vertigo.
Thankfully the savings habits of the population and their deep trust in the financial system has facilitated financing of this borrowing requirement internally. Indeed foreign debt has reduced.
This is good as long as it lasts. But can it be expected to last if government keeps amassing debt at this horrendous rate and simultaneously disposing of the family silver diluting the backing for the increasing burden of the debt? If the government keeps abusing the trust of the people in the financial system it is risking a sudden strap bringing on to us an economic avalanche.
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