Gibraltar Savings Bank ‘is a safe investment’, Bossano says

Gibraltar Savings Bank ‘is a safe investment’, Bossano says

Gibraltarians will not find a safer bank for their investments than the Gibraltar Savings Bank, Economic Development Minister Joe Bossano told Parliament this week.
Mr Bossano shrugged off criticism from GSD MP Roy Clinton about the way the government has used funds invested in the savings bank.
“He has been a banker and he knows exactly what he is doing by suggesting that the money in the GSB is not safer than in any privately-owned bank,” Mr Bossano said.
“I have explained that it is a key element of economic strategy and a key constituent of our economic growth.”
“I have explained why and how and why we do not have liquidity problems, all to no avail.”
He added: “He knows full well that his criticism is baseless and that if it were believed, it would be very damaging, for the savings bank and for all of us.”
“If he had been successful in the scaremongering, the public would have been taking their money out and Gibraltar would have been the poorer for it.”
“I’m happy to say that nobody has paid attention to it and we continue to attract increasing investments from existing and new customers.”
Mr Bossano said customers had deposited nearly one billion pounds in the savings bank, which very carefully managed its obligations and responsibilities.
He said, for example, that this year £220m in debentures reached maturity date. For that reason, the GSB had £220m in ready cash to pay its customers if they wanted their money back.
“Not many banks can say that,” he said.
“All the indications we have is that the vast majority of our customers will reinvest all or nearly all of their cash with the savings bank, a vote of confidence in the institution…”
“I want to reassure the investing customers that they will not find a safer home for their savings and that it is important for them to know that we are putting their money to work for the betterment of Gibraltar.”
In a wide-ranging budget address, Mr Bossano reflected on the impact of Brexit and said that it was very difficult to forecast how the economy would develop in the months ahead.
“The strong performance of the private sector in the last financial year may not be repeatable in the current year with so many imponderables that it is impossible to make any kind of sound judgement,” he said.
“In terms of the existing economic model, we need to continue developing the initiatives and the areas of the economy that are showing growth until we are better placed to be able to assess what is the likely outcome in two years time.”
Mr Bossano highlighted the government’s training for employment schemes, deflecting GSD criticism and insisting that funding for them would continue to be made available irrespective of Brexit and the loss of EU funding.
“The economic growth in the private sector employment in 2016…has been greater than in any one of the 16 years that the GSD was in government,” Mr Bossano said.
He also welcomed the GSD’s support for his policy of storing up “rainy day funds”, which he said were designed to ensure the provision of essential services in the event of an unexpected drop in revenue. 
“The rainy day funds policy does not serve the short term interests of the politician of the day, who is only interested in vote catching and the chances of re-election, but it is vital for the long term survival of the country,” he said.
“With Brexit looming in 2019, there is no better time than now to understand the importance of the concept.”
Mr Bossano also rejected the GSD’s criticism of the government’s use of government-owned companies, adding that this was a practice used by previous GSD administrations.
In 2009, Mr Bossano said by way of example, government companies were spending £47m which did not feature in the Improvement and Development Fund, mostly on housing projects.
Mr Bossano said the previous GSD administration had also had plans to finance capital works worth £1.5bn by raising funds through government companies, “thereby not being recorded as public debt”.
“All this was being done by the GSD when the present leader of the opposition was a member of the government,” Mr Bossano said.
“That means that although we knew nothing of the details until after December 2011, he must have known it.”
He added: “I can tell you that when this was happening, we in the Opposition at no stage imputed improper motives to them, accused them of breaking any constitutional obligations saying they were hiding money to keep the Opposition uninformed.”
“None of those accusations were made when they were doing it and they were the first ones to do it.”
Mr Bossano said “debt itself is not evil” and that Gibraltar’s debt was considered “a very low figure” as a ratio of GDP.
He said there where other governments borrowed to meet recurrent expenditure, Gibraltar only borrowed to finance capital projects.
“Anything that is spent on capital projects cannot be having an effect on recurrent revenue or expenditure,” he said.

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Brian Reyes
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