Economy needs sounder foundations - Labour

The country's financial situation will remain precarious if the economy is not placed on the sound foundations of real and sustainable development, the Labour Party's deputy leader and spokesman on finance and economic affairs, Dr Charles Mangion, said in a statement.

The government should wake up and stop deceiving people with false propaganda and seriously identify the problems it had created for the country and address them with credibility, he added.

Dr Mangion said an analysis of the financial situation of the country for the first eight months this year confirmed that the government was doing its utmost to hide the truth about the real situation and how this will be developing in the future.

He said the method of calculations on the basis of 'cash' rather than on 'accruals' was giving a distorted picture of the financial situation.

Dr Mangion said that higher revenue from income tax, VAT and social contributions was based on arrears that were collected during the first eight months of the year, he said.

But although it was good that arrears are collected, it was preoccupying that additional income was not resulting from the expansion of productive economic sectors where expansion would be reflected in bigger profits and higher earnings for employees.

The revenue received by the government from VAT during the first eight months could easily result from the increase in the price of fuel on which Government collected VAT, he said.

Dr Mangion said that the reduction in the national debt of Lm49 million was due to the Lm94 million that Government received from the sale of Maltacom.

Dr Mangion said that, as confirmed by financial statistics, Government revenue from the Central Bank continued to drop in the last 12 months. This reflected primarily the deficit in the current account because of the difference between exports of goods and services and imports which was increasing because no real and sustainable development existed despite Government's boasting.