This cedoli initiative by the Nationalist Party makes sense for the party itself but it also makes sense for the investor.

After the election which it lost, the party found itself in a horrendous financial situation. (It is indicative of the state of mind in those days that this situation was allowed to develop, that it was not addressed, or even, heaven forbid, that someone thought it would be solved by remaining in government).

When the full extent of the losses became evident, the party risked collapse, following the collapse at the polls.

That was when the new leadership commissioned a thorough study of the financial situation. Then surgery began, very painful surgery, that cost the jobs of many employees at the lower levels.

In that way, the hemorrhage was stopped. That does not mean the party is not in the red any more, or that it does not have debts to pay. It does, but the loss-makers have been addressed and brought under control.

The party still has a mountain of debt but at least it is under control, known and being addressed.

That is where the cedoli idea came in. The basic idea – the party has not, in our opinion, explained this well to the country – seems to be that instead of paying banks heavy interest, the party borrows money and pays a higher rate of interest than the investors would get from the banks.

It makes sense for the investor who gets a higher return. And it makes sense for the party because the rates it offers are less than the interest it would pay to banks, etc.

Predictably, the idea has attracted fulminations from the government side, although this forgets that it too offered cedoli when it was building its Glass House in Hamrun. And that despite what was said this week, that it took only loans of Lm20 at a time, it actually took in loans of up to Lm500.

The PN cedoli initiative was called all sorts of names, from a Ponzi Scheme to a money laundering scheme with government speakers asking if any fish farming bosses had invested in the scheme because fish farming was the soup of the day and because PN had not come out like the government with guns blazing against them.

It was also claimed the scheme undermines the party financing law just promulgated, but it does not: it is according to the law. And in any case, the government, if it infringes the law, has the means to enforce the law.

But the more the government argued against, the more loans came in. Last Sunday, when the PN leader boasted the party had raked in some €3 million in such loans, the prime minister, speaking on telephone from Berlin, focused on this issue and forgot all the other issues in the country and in Europe.

Obviously, this scheme is based on two assumptions:

-         That the party is managed in a financially serious manner;

-         And that it continues to rake in donations to continue to pay back its dues.

The cedoli initiative makes sense only as a stopgap measure to cut down on high banking and similar costs.