Maltastar
It is indeed a pity that the level of public schooling has been allowed to fall below that available at church and private schools (although a few shining exceptions exist as well in the public school sector). The right to education, as in the case of health, is universal and should not be conditional on the financial status of the family. Poor families who cannot afford private schooling have a right to quality education for their children within the public education system.
If the project being financed was of a productive type and expected to repay itself through its own cash flows such off-balance sheet funding could be tolerated. If for example such borrowing is raised to finance the construction of a highway which is expected to generate toll-revenues then it could be acceptable as the government guarantee would be expected to remain contingent.
But funding public schooling does not produce any cash flow. Schools are social infrastructure which the Sate is expected to provide to the population by applying our tax money which has been rewarding government with some Lm240 million more than we were paying in 1998. Government guarantee in this case is not contingent. It is real and the loan will only be repaid from contributions from the consolidated fund.
The PN has finally realised that to bring public schools to an acceptable level of effectiveness more resources have to be devoted. Resources comprise not just the physical schools environment, including the equipment and facilities available with the schools. They comprise also the management systems and human resources devoted to the schools and the administrative support given by central government.
“The formation of a Foundation gives rise to suspicion as to the real motivations for choosing this vehicle”
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It is indeed a pity that the level of public schooling has been allowed to fall below that available at church and private schools (although a few shining exceptions exist as well in the public school sector). The right to education, as in the case of health, is universal and should not be conditional on the financial status of the family. Poor families who cannot afford private schooling have a right to quality education for their children within the public education system.
The government has set up a foundation called Foundation for Tomorrow’s Schools and has charged the Foundation to execute a programme to build new schools investing some Lm70 over the next few years in order to up-date the configuration of public schooling facilities.
The formation of a Foundation (as in the case of the Tal-Qroqq hospital) gives rise to suspicion as to the real motivations for choosing this vehicle. The investment could and ideally should be made within the structures of central government. The counter-argument is made that the creation of an autonomous body injects efficiency in the use and application of resources. This is doubtful. If the same people are to be involved in executing a project does it really make any difference on the type of vehicle within which they operate?
Or is it that such autonomous vehicles are used to escape the financial controls and accountability demanded by central government control systems?
It is easy to answer in affirmation basing on the practical experience of the FMSS, the Foundation in charge of theTal-Qroqq Hospital
But the evidence goes further.
The Foundation for Tomorrow’s Schools is proposing to fund its programme by commercial bank borrowing which will be guaranteed by the government. As I argued elsewhere in my writings, this type of off-balance sheet financing is economically irresponsible and extremely harmful.
The formation of a Foundation (as in the case of the Tal-Qroqq hospital) gives rise to suspicion as to the real motivations for choosing this vehicle. The investment could and ideally should be made within the structures of central government. The counter-argument is made that the creation of an autonomous body injects efficiency in the use and application of resources. This is doubtful. If the same people are to be involved in executing a project does it really make any difference on the type of vehicle within which they operate?
Or is it that such autonomous vehicles are used to escape the financial controls and accountability demanded by central government control systems?
It is easy to answer in affirmation basing on the practical experience of the FMSS, the Foundation in charge of the
But the evidence goes further.
The Foundation for Tomorrow’s Schools is proposing to fund its programme by commercial bank borrowing which will be guaranteed by the government. As I argued elsewhere in my writings, this type of off-balance sheet financing is economically irresponsible and extremely harmful.
“The financial irresponsibility of this government and its crisis management to the exploding national debt and persistent fiscal deficit re-confirms itself with monotonous regularity.”
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If the project being financed was of a productive type and expected to repay itself through its own cash flows such off-balance sheet funding could be tolerated. If for example such borrowing is raised to finance the construction of a highway which is expected to generate toll-revenues then it could be acceptable as the government guarantee would be expected to remain contingent.
But funding public schooling does not produce any cash flow. Schools are social infrastructure which the Sate is expected to provide to the population by applying our tax money which has been rewarding government with some Lm240 million more than we were paying in 1998. Government guarantee in this case is not contingent. It is real and the loan will only be repaid from contributions from the consolidated fund.
The consolidated fund (read the public budget) is already well loaded with similar obligations. Each year the government has to vote some Lm30 million just to service the interest obligations of similar dead loans existing in the form of bank borrowing by government-owned organisations that cannot even afford to pay the interest let alone provide for repayment of the capital. Foremost amongst these is the Freeport
Water Services Corporation receives some Lm4 million p.a. for similar purposes and Gozo Ferries also reaches out its hand for similar payments purely to pay the interest on the bank loans raised to finance the Gozo ferries, the revenue from the operation of which goes to a totally different company, i.e. Gozo Channel Co. Ltd.
To this list, which comprises many others, we are now going to add the Foundation for Tomorrow’s Schools. Off balance-sheet borrowing of Lm70 million to finance social infrastructure is resorted to by panic stricken governments whose financial position is so tight as not to permit direct funding.
Such financial engineering, will no doubt be frowned at by international rating agencies and by the IMF and could well lead to the formation of their opinion that the government is not seriously resolved to address the public deficit problem but is just engineering to fudge the problem by hiding it off-balance. With the Enron experience behind them credit-rating agencies, who have just down-gradedJapan
The financial irresponsibility of this government and its crisis management to the exploding national debt and persistent fiscal deficit re-confirms itself with monotonous regularity.
Water Services Corporation receives some Lm4 million p.a. for similar purposes and Gozo Ferries also reaches out its hand for similar payments purely to pay the interest on the bank loans raised to finance the Gozo ferries, the revenue from the operation of which goes to a totally different company, i.e. Gozo Channel Co. Ltd.
To this list, which comprises many others, we are now going to add the Foundation for Tomorrow’s Schools. Off balance-sheet borrowing of Lm70 million to finance social infrastructure is resorted to by panic stricken governments whose financial position is so tight as not to permit direct funding.
Such financial engineering, will no doubt be frowned at by international rating agencies and by the IMF and could well lead to the formation of their opinion that the government is not seriously resolved to address the public deficit problem but is just engineering to fudge the problem by hiding it off-balance. With the Enron experience behind them credit-rating agencies, who have just down-graded
The financial irresponsibility of this government and its crisis management to the exploding national debt and persistent fiscal deficit re-confirms itself with monotonous regularity.
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