Editorial

As the implications of the oil price bombshell begin to sink in, the government has announced the date for the presentation of the budget which, this year, is going to be tabled earlier than usual so as not to clash with the Conference of Heads of Commonwealth next month.

In fact, the minister's exposition of the size of the problem brought about by the rise in the price of oil comes less than three months after the publication of the pre-budget document, ironically called A Better Quality of Life.

A better quality of life is what most aim for, but budget time is hardly ever conducive to generating any new visions of leaps forward in this direction, even though this is invariably the stated aim of every administration. In the foreword to that document, the Prime Minister, Lawrence Gonzi, speaks of his government's belief in the country's potential to secure for itself a future of excellence.

As matters are developing today, and especially since Investments Minister Austin Gatt announced the extent of the black hole, calculated at Lm50 million, few are bound to share much of the Prime Minister's enthusiasm. Not that Dr Gonzi's belief is misplaced or that it is out of reach. It is not. It is simply that the implications of the minister's declaration leave little room to anyone to think of matters other than how to cope with the effects of the measures the government plans to take to patch up the hole.

The minister has made public the options the government considered taking: raising the electricity surcharge from 17 per cent to 102 per cent or putting the price of fuel up by 20c a litre and shouldering some of the price burden itself by raising taxes or borrowing more. As expected, the social partners rose in one chorus to express fears about the effects any of the options would have on the consumer and, also, on the economy generally.

Their reaction was discussed within the Malta Council for Economic and Social Development, and the government has now said it plans to take a decision when the cabinet meets again on Tuesday. The social partners are said to have suggested that the burden be spread fairly (not quite imaginative, is it), but, as expected, nothing concrete in terms of collective proposals has come out of the MCESD meeting.

The government has been sharply criticised by some for disregarding oil price hedging at a time when this would have probably saved the country a great deal; others are now suggesting that in the interest of the economy, it should reconsider its deficit target for next year. A report done for the Federation of Industry has called on the government to allow greater flexibility in the lira's pegging to the euro as a way to dampen the oil price shocks.

Whatever options the government resorts to, the way forward is expected to be a bit more difficult as the new measures eat away at the consumer's earnings and add to the economic operators' costs. What the country expects of the government now is for a new drive to be made on its part to reduce unnecessary expenditure. It has to be seen to be doing so. It also needs to give an account of how the energy corporation is operating in terms of efficiency.

Ultimately though, the country has to face up to the oil price hikes and see how it can make up for them through greater efforts to increase productivity and generate new economic growth.