One private sector project delay lowers 2019 GDP forecast by 0.1%

A delay in a single “major investment project in the private sector” has seen the Central Bank of Malta lowering the entire country’s Gross Domestic Product forecast for the year by 0.1 per cent.

The Bank, however, did not mention which delay to which specific project was affecting the country’s GDP on such a level.

This year’s GDP growth estimate had been forecast by the Bank, back in June, at 5.5 per cent, and it was lowered yesterday to 5.4 per cent with the Bank explaining, “Compared with the previous projections, GDP growth has been revised marginally downwards in 2019, due to a delay in a major investment project in the private sector.”

Contacted yesterday, the Bank declined to elaborate upon or specify which exact project the bank refers to in its analysis, and

explained that it would not identify any specific projects referred to in yesterday’s publication.

The delay to the “major investment project in the private sector” would be public knowledge, and one such delay to a project of such a magnitude that cropped up between the June projections and yesterday’s was the db Group’s €300 million project being developed, rather controversially, on the former Institute of Tourism Studies site in St George’s Bay.

Mata’s GDP in 2018 stood at €12.3 billion, meaning that the 0.1% impact on GDP that the Central Bank referred to yesterday is worth approximately €12.3 million to Malta’s GDP, whatever the project was.

Speculation doing the rounds yesterday was that it was either this particular project or a delay to another major construction project that was responsible for leaving such a dent in the country’s economic productivity levels.

The American University of Malta project at Zonqor is currently on hold, and some construction projects have been downsized, but it appears to be the City Centre project that most likely fits this particular bill.

The project was recently sent back to the drawing board by a judge because one of the Planning Authority board members, Matthew Pace, who had voted in favour of the approved was found to have had a conflict of interest in that he was selling the project’s apartments as a real estate agent.

Because of that, the db Group is now also demanding what could turn out to be pretty hefty damages from the Planning Authority.

The Group had filed a judicial protest demanding damages from the Planning Authority, arguing that a recent court decision against the enormous project on the former Institute of Tourism Studies site, had failed to safeguard its right to a fair hearing.

A Court of Appeal declared the planning permit granted last September null and void. Judge Mark Chetcuti ruled that planning board member Matthew Pace had had a conflict of interest because of his involvement in real estate when he voted on the project.

Pace is the franchise owner of an agency found to have been selling the project’s apartments before a planning permit had even been issued.

The db Group has said it would be reactivating the application process for the project, arguing that the revocation was based exclusively on one, single point: the conflict of interest and that, “this has absolutely nothing to do with the db Group and even less to do with the project itself.”

It will, however, spell out a delay significant for the project, and a potentially significant payout to the Planning Authority.

The db Group insists that it has “rigorously followed all the applicable laws and procedures of every institution involved. We shall continue to do so with rectitude, openness and determination. It is with this same approach that we shall ensure that our group enjoys its full rights at law – the same ones enjoyed by others.”