17 - 23 May 2001

Proceeds to be used to reduce debt

by Ivan Brincat

With the preparatory work ready or nearing completion, the government’s privatisation of a number of public entities is expected to begin in earnest very soon.
However, the proceeds from the privatisation programme will not go towards debt reduction and “not a single cent will be used to finance government spending”, Finance Minister John Dalli said.
In an interview with The Malta Business Weekly, Mr Dalli said the government had to keep pushing to balance its revenue and spending on a year-to-year basis without bringing in one-off receipts from privatisation.
After the sale of Mid-Med Bank to HSBC in 1999, the privatisation process slowed down.
However, Mr Dalli said that when Mid-Med Bank was privatised, the government had made a very strong statement that privatisation was still on the cards.
“In the meantime we have made preparations so that various companies could be privatised. In the case of the bank, the environment was conducive to privatisation because reforms in the financial sector were implemented and operations by private enterprise could take place.”
However, a lot of preparatory work was required with regards to the Malta Freeport, the Malta International Airport and the Lotto Department.
With regards to the Malta Freeport, the government had to rearrange the conditions of an international loan that was taken by the terminal for the building of its infrastructure. “We are looking for a foreign operator to enter into a 30-year management agreement with the Freeport,” Mr Dalli said.
The government has also worked to develop the relationship between the airport and the airline company before privatisation
can take place. “We also have to determine the real estate that will be included when it is privatised.”
The government will seek a minority shareholding from a foreign strategic partner to run the MIA. “The rest of the company will be sold in stages on the local stock exchange.”
Meanwhile, a law setting up the regulatory body of the gaming sector in Malta will be discussed in Parliament soon. Mr Dalli said that in the case of the lotto department, the law had to be rewritten to set up the regulatory body.
“We are seeking some type of foreign involvement due to the technologies involved. But it is public knowledge that there is also Maltese interest in this field,” Mr Dalli said.
The government has so far made calls for interest for the Malta Freeport, the Lotto Department, Kordin Grain Terminal and MOBC.
The privatisation of the 60 per cent stake government still has in Maltacom will not take place for the time being.
Mr Dalli said it was ludicrous to privatise such a company considering the monopolistic state it was operating in. “The privatisation of part of this company by the Labour government was a step in the wrong direction. We have spent the necessary time to discuss and agree on the liberalisation programme which is currently being implemented. This will create the right environment for further privatisation of Maltacom.