The ABC behind the figures
by Martin Debattista

The Government's Budget for 2004 is the last Budget for Malta before it joins the European Union on May 1st 2004. Malta's accession means that the country's finances will also be closely monitored from Brussels, and the government Budget's will not remain a strictly national matter anymore.

In the last few years Malta's drive towards membership has been reflected in the Budget, with substantial sums of money relocated to the adoption of EU legislation and the implementation of the necessary reforms to make Malta ready to join the 15-nation bloc.

The European Commission and the other EU institutions will also be monitoring Malta's adoption of the EU body of legislation.

One of the main areas when Brussels will be monitoring the Budget is where it addresses the public deficit and its alignment with the stringent criteria that allows Malta to join the single European currency, the Euro.

Rising unemployment in the manufacturing industry, a restructuring of the public service, a restructuring of public corporations, a looming reform in pensions and a reform in social security complete the backdrop of the Budget 2004.

The top echelons of the government have hinted at the shape of things to come. The conclusion everyone is coming to is that the country is in for structural reforms which will not be easy to implement. The fate of the Maltese shipyards and Public Broadcasting Services could well set the example of what other sectors should expect.

At the end of the Nationalist Party's General Council on Sunday, November 16th, the Prime Minister called for revision of government tax system. Dr. Eddie Fenech Adami spoke if the Value Added Tax (VAT) system and explained how it is necessary to revise the current taxation system in order to satisfy the present's needs. He added that the same approach is to be taken in regards to the welfare systems and its future viability.

On the other hand, Finance Minister John Dalli, speaking to bankers a few days before, insisted that Malta can boast one of the best health systems in the world, the best pensions system, and the best social services. He also mentioned the unique education system Malta has adopted whereby students are paid to study, facilitating the ongoing education for the underprivileged. Hence, the Minister continued, what causes deficits is the public expenditure entailed to offer the free services to the citizens.

In his speech the Minister implied that Maltese society needs to re-define the concept of the Welfare State. One must seriously address the question of whether the current welfare practices are fully sustainable or not. Minister Dalli made no bones about this, saying that current and projected economic and demographic indicators show that they are not. This is why, said the Minister, reforms need to be implemented.