Not enough members of the Maltese population appear to realise just how much hangs in the balance in the run-up to the referendum on whether Malta should accept the package negotiated for membership of the European Union. The referendum may be six months away and the final 'package' will not be known before year's end, but already the warning signs are that every single one of us will feel the pinch in our pockets - where it hurts most - immediately we decide one way or the other.

If a further indication were needed, the publication of international credit rating agency Fitch's Malta ratings last week is conditional to Malta accepting to join the EU, with the emphasis that the referendum will prove "critical" to the economy's future course. For the record, the London-based agency maintained its long-term foreign currency rating of A, its short-term rating at F1 and its long-term local currency rating at AA-.

Why should joining the EU be so "critical"? Simply because the thrust to 'put our house in order' in preparation of membership involves the introduction of many radical changes on many aspects of Maltese economic life. Government intervention in the economy, the monopolistic measures it has adopted in the past and the way certain enterprises have been protected from free and fair competition are all on the way out and its efforts to improve its fiscal position have become more apparent.

We have stated in these columns repeatedly in the past that the so-called public sector of the economy needs to shrink, that monopolies (duopolies and other -polies) of any sort should be induced to act 'competitively' and that every effort must be made to help the 'productive' sector of the economy do what it knows best with as little state intervention possible.

Fitch could not put it more bluntly when it states: "If Malta remains outside the EU, the pressure to tackle these problems would be less. Because of this, a decision not to join the EU could impair the republic's creditworthiness." Of course, for the Opposition Malta Labour Party this is not the end of the world because its leader Alfred Sant wants Malta to stay out of the EU at any cost.

It will be the small man and woman of this country who will have to pay the price should the vote in next year's referendum swing in the unthinkable direction against membership. For if those ratings should slip, the cost of borrowing will go up, and this will start a needless inflationary spiral that will lead to productive industries having to make employees redundant and the country rushing headlong into recession.

Fitch also made a valid point that should not be underestimated: "Malta's voice within the EU would be small, though the country would have its own commissioner. Outside the EU, Malta's lack of strategic importance in the modern world would mean the rest of the world could simply ignore Malta."

Let's face it, all talk that Malta's strategic geographical location entitles it to a place in the sun with no effort having to be made to earn its keep is nonsense. There is a very real threat that, outside the EU, Malta would be a nobody. What is it worth to be able to stand alone and have to compete against the goliaths of the economic world, including some privately owned corporations whose revenues and employee count far exceeds that of our country? As Fitch rightly remarks, the EU option is more likely to yield economic benefits.

Economic assistance, if this was expected, may not be forthcoming in monetary terms. It comes in the form of exchange of knowhow and personnel, the positive outlook given to the economy and its components by the rating agencies and the 'feel good' factor that is psychologically so important for business to be encouraged by the overall outlook for the country. There is really no choice in the forthcoming referendum and we would only be shooting ourselves in the leg if we thought otherwise.