The ABC Behind the Figures
by Martin Debattista
The year 2005 did not start on a good note, as discussions between representatives of workers, employers and government on a Social Pact floundered. In that situation the government decided to continue its work on the amendment of the law on public holidays announced in the 2005 budget speech. No extra leave was to be given to employees in lieu of public and national holidays falling on week-ends.
However there was some good news in February as the European Commission announced that Malta is on track for correcting its excessive deficit by 2006 as recommended by the Council. According to the Commission’s assessment of Malta’s updated convergence programme, the general government deficit is expected to fall from 5.2 per cent in 2004 to 2.3 per cent in 2006 and 1.4 per cent in 2007.
In May the currencies of Malta, Cyprus and Latvia were included in the Exchange Rate Mechanism II (ERM II). They followed Estonia, Lithuania and Slovenia, which became members of ERM II on 28 June 2004, as well as Denmark, a long-standing member. This was effectively Malta’s final step before adopting the Euro currency which, according to various sources, could be introduced around the year 2008. Malta has to adopt the Euro as part of its commitments related to EU membership.
Financial statistics for the period January-August 2005 by the National Statistics Office revealed the shortfall between the government's recurrent revenue and total expenditure amounted to Lm91.1 million, against Lm112.8 million one year earlier. On the other hand debt increased by Lm59.5 million or 4.4 per cent when compared to last year.
It seems the government recovered during the summer since it was previously reported that during the first five months this year the government deficit had gone up to Lm93.1 million, compared to Lm85.7 million registered in the same period in 2004.
Summer was indeed a busy time for government in financial matters.
At the end of July the government launched a pre-budget consultation document entitled “A Better Quality of Life” which articulated the government’s plans for the upcoming budgets between 2006 and 2010. Building on the three main pillars that were identified in the 2005 budget, namely the economy, education and the environment, the documents put forward “the platform for decisions to be taken by business operators, investors and economic players and demystifies the secrecy which frequently surrounds the budgetary period,” according to Prime Minister Dr. Lawrence Gonzi.
Then on August 8 Parliamentary Secretary Tonio Fenech revealed that in the upcoming budget no new taxes or additional fiscal burdens are expected to be introduced, since the government had witnessed a turnaround in its finances. It is unlikely, however, that current taxes will be reduced, according to Mr. Fenech. In turn, the government plans to reduce this year's projected target deficit of Lm76 million to Lm52 million by 2006. However, the Parliamentary Secretary stated that he hoped this would become possible in next year’s budget if economic growth flourishes and reduction in expenditure occurs. Mr. Fenech also explained how November’s budget is to bring along incentives to boost the property rental sector and aid the self-employed.
In August the Central Bank of Malta has published the second issue of its Quarterly Review for 2005 suggesting that a marginally contracting economy as seen in the first months of 2005 could make room for potentially positive prospects in the near future. However a few weeks before GRTU called for an immediate review the country’s dire economic situation in Parliament and strive to find effective solutions immediately.
In the last week of September Parliament reconvened after the summer recess and consultation on the budget for 2006 started with the social partners in the Malta Council for Economic and Social Development (MCESD). These were based on the pre-budget document. However discussions immediately focused on the high cost of fuel, as the government made it cleat it has not choice but to raise electricity, water and fuel prices to make up for Enemalta’s extremely high fuel bills.
by Martin Debattista
The year 2005 did not start on a good note, as discussions between representatives of workers, employers and government on a Social Pact floundered. In that situation the government decided to continue its work on the amendment of the law on public holidays announced in the 2005 budget speech. No extra leave was to be given to employees in lieu of public and national holidays falling on week-ends.
However there was some good news in February as the European Commission announced that Malta is on track for correcting its excessive deficit by 2006 as recommended by the Council. According to the Commission’s assessment of Malta’s updated convergence programme, the general government deficit is expected to fall from 5.2 per cent in 2004 to 2.3 per cent in 2006 and 1.4 per cent in 2007.
In May the currencies of Malta, Cyprus and Latvia were included in the Exchange Rate Mechanism II (ERM II). They followed Estonia, Lithuania and Slovenia, which became members of ERM II on 28 June 2004, as well as Denmark, a long-standing member. This was effectively Malta’s final step before adopting the Euro currency which, according to various sources, could be introduced around the year 2008. Malta has to adopt the Euro as part of its commitments related to EU membership.
Financial statistics for the period January-August 2005 by the National Statistics Office revealed the shortfall between the government's recurrent revenue and total expenditure amounted to Lm91.1 million, against Lm112.8 million one year earlier. On the other hand debt increased by Lm59.5 million or 4.4 per cent when compared to last year.
It seems the government recovered during the summer since it was previously reported that during the first five months this year the government deficit had gone up to Lm93.1 million, compared to Lm85.7 million registered in the same period in 2004.
Summer was indeed a busy time for government in financial matters.
At the end of July the government launched a pre-budget consultation document entitled “A Better Quality of Life” which articulated the government’s plans for the upcoming budgets between 2006 and 2010. Building on the three main pillars that were identified in the 2005 budget, namely the economy, education and the environment, the documents put forward “the platform for decisions to be taken by business operators, investors and economic players and demystifies the secrecy which frequently surrounds the budgetary period,” according to Prime Minister Dr. Lawrence Gonzi.
Then on August 8 Parliamentary Secretary Tonio Fenech revealed that in the upcoming budget no new taxes or additional fiscal burdens are expected to be introduced, since the government had witnessed a turnaround in its finances. It is unlikely, however, that current taxes will be reduced, according to Mr. Fenech. In turn, the government plans to reduce this year's projected target deficit of Lm76 million to Lm52 million by 2006. However, the Parliamentary Secretary stated that he hoped this would become possible in next year’s budget if economic growth flourishes and reduction in expenditure occurs. Mr. Fenech also explained how November’s budget is to bring along incentives to boost the property rental sector and aid the self-employed.
In August the Central Bank of Malta has published the second issue of its Quarterly Review for 2005 suggesting that a marginally contracting economy as seen in the first months of 2005 could make room for potentially positive prospects in the near future. However a few weeks before GRTU called for an immediate review the country’s dire economic situation in Parliament and strive to find effective solutions immediately.
In the last week of September Parliament reconvened after the summer recess and consultation on the budget for 2006 started with the social partners in the Malta Council for Economic and Social Development (MCESD). These were based on the pre-budget document. However discussions immediately focused on the high cost of fuel, as the government made it cleat it has not choice but to raise electricity, water and fuel prices to make up for Enemalta’s extremely high fuel bills.
