Dual dicing

The euro game grows far rougher than anything yet seen in the World Cup. Inescapable reality stays onside: Malta is obliged to adopt the euro subject to meet the Maastricht criteria. However divided the opinion on timing, the definite first move was up to the Maltese authorities. Once they decided on the target date of entry and the central rate, the die was cast. There can no longer be meaningful debate on what and when. Debate, unless it is to be crude time wasting, has to be on what can be done, in so far as it is within our power to do it, to meet the entry criteria.

To continue to position on a preference for a substantial devaluation before someday adopting the euro, harms both the present and the future. To make an issue of dual pricing more than a year before it is determined whether Malta satisfies the conditions for adopting the euro, and 18 months prior to adoption if it does satisfy the criteria, merely fans controversy. If the government wishes to have a year of dual pricing (from January 2007), it should bring that to the table at the start of the coming December, not now.

By then the economic outturn and the state of the public finances for the whole of 2006 should be estimated within a good margin of probability, enabling scenario building for the first half of 2007, on the actual basis of which Malta's eligibility to adopt the euro will be assessed. If, come December, it can be reasonably assumed that Malta will satisfy the adoption requirements in the mid-2007 assessment, the education campaign can start in earnest.

The campaign need not take 12 months, certainly not on a compulsory basis. Adamant or not, the government can only trigger parallel pricing before Adoption Day if it persuades the banks to transact in euros at the central rate in the meanwhile. Otherwise the running-in should be on tri-pricing basis, as recommended in this newspaper by the economist Karm Farrugia, who is more familiar than most with how the real economy works.

Generating controversy now, putting in doubt the timing on entry even should we satisfy the Maastricht criteria at the time of the assessment, implying prior devaluation and speaking of cautious optimism simply increases uncertainty. The approach from both sides of the political spectrum dices with the external reserves. I should think the Governor of the Central Bank decided to speak out more bluntly than usual about that danger last week as a lesser of two evils.

This is neither a game, nor a political issue. Those within the Nationalist Party who see adoption of the euro as a must-do so they can boast that the EU has certified the Nationalist government as a success, enabling the PM to call an election around March, and others on the Labour side who want postponement to some obscure date, indulge in a perilous exercise of dual dicing with a collapse in confidence.