Government unable to control spiralling prices - Mangion

Labour deputy leader Charles Mangion yesterday said the country's rising inflation, recently confirmed by the European Union's statistical arm Eurostat, contradicted the government's claim that prices were on the wane.

Addressing a press conference on the state of the economy at the MLP headquarters in Hamrun, Dr Mangion said even the National Statistics Office's announcement that the Harmonised Index of Consumer Prices went up to 3.1 per cent last month disagreed with the government's own pre-budget document which reported that prices were going down.

Prices of essential items, he said, such as food, clothing, health and transport in the first five months of this year had gone up, when compared to last year, by the highest rate since 1995.

He blamed the government's inability to control spiralling prices and its "bad policies", insisting that the impact of international oil prices could not be blamed for the inflationary rise.

"The economies of other EU member states which are also burdened with the spiralling oil prices are doing well while our economy is stagnant," Dr Mangion said, explaining how, since 1998, the country's growth rate had diminished to the point that it has been surpassed by Cyprus, Slovenia and the Czech Republic. Unlike Malta, these new EU member states had been steadfast in reforming their economies and increased their economic activity and growth.

Dr Mangion said the stockpiling of inventories and one-off expenditures, such as the Mater Dei hospital and roads, accounted for the marginal increase in the Gross Domestic Product in 2005 and at the beginning of this year. At the same time, exports of goods and services, which are the backbone of the economy, had dipped by six per cent.

The effect of a shrinking economy was being felt in tourism and in the escalating unemployment rate.

He said the government was trying to patch up by selling public assets, but one-off sales like Maltacom and Bank of Valletta, which was in the pipeline to be sold to a public investor, would not solve the problems which stemmed from the inability to curb expenditure.

Bureaucracy was another problem linked to the stagnant economy. Reforms which the government had promised, Dr Mangion said, had not worked out. One example was the port reform exercise which was meant to have made import and export tariffs cheaper but which was still clouded in mystery, as nobody seemed to understand what was going on.