Editorial

The European Commissioner for Economic and Monetary Affairs, Joachim Almunia, reacted unequivocally to Opposition Leader Alfred Sant's suggestion that the introduction of the euro should be delayed until growth rates were higher.

He said that "the arguments (Dr Sant) was making were not linked at all with the introduction of the single currency. They are other arguments, that can be taken into account in the normal political debate between government and opposition".

Three aspects of the euro are in the limelight.

The political one - Dr Sant's insistence on a delay and the government's confusing messages as to when dual pricing will be introduced.

The macroeconomic one - whether the final rate will be far removed from that in force during this preliminary ERMII phase, increasing the perception of inflation.

The microeconomic one - whether tourists will expect to pay in euro once prices are also quoted in this currency.

Dr Sant is arguing in favour of delaying euro day until the growth rate is four per cent annually. Thankfully, the timing of entry is ruled by well-established procedures that will not allow any sacrifices at the altar of political milestones.

Fundamental is the belief that the European Central Bank will not be impressed or swayed by any of the hot air rising over Malta. In the end, it will be down to whether the country meets the Maastricht criteria or not and whether it can do so in a sustainable manner once all the privatisation revenue has been counted out. The growth rate becomes relevant within the context of the gross domestic product and its ratio to deficit and debt. The higher the growth, the better the ratio for the same levels.

In the meantime, the Chamber of Small and Medium Enterprises - GRTU says it is worried tourists will want to pay in euros once prices are displayed in this currency. At the moment they are charged a premium for the convenience but once dual pricing is introduced outlets will have to use the official conversion rate, which does not make allowances for the outlet's transaction costs until euro day. A formula must be found to deal with this - whether it is for six months or a year.

After all, the whole point of dual pricing display is to get people used to the currency: The enemy is perceived inflation - not real inflation - so the rate must be right at the outset.

Eurozone countries have surely got as many opportunists as Malta does and yet statistics show that, at most, 0.28 per cent of the 2.3 per cent inflation was due to the introduction of the euro.

One aspect that may have been strong in other countries but does not seem to be the case here is independent consumer protection. An efficient Consumer Affairs Association which can bite can prove to be a determining factor in keeping abuse in check. Indeed, it may be the best tool a government can have.

Unfortunately, the government's arguments defending the principle of dual pricing are weak. The issue is its duration - whether it starts before the final rate is established - and whether there is abuse. Indeed, the only argument for a longer dual pricing period is to allow enough time for cast-iron monitoring. But a year? No wonder Parliamentary Secretary Tonio Fenech is now fudging.

Estonia has already fallen by the wayside and postponed its euro day. Lithuania, lagging on inflation criteria, will have to wait as well. Our inflation also puts us at risk. Dr Sant may see his wish fulfilled after all. And then?