The budget - two days after

The budget was presented in Parliament on Wednesday. It was put under scrutiny by the opposition party, social partners, non-governmental organisations, businesses and individuals for at least 24 hours. It is only appropriate that we get further reactions to the budget in the coming days. In fact the reactions to the budget two days after are likely to be less emotional and more rational, and tend to reflect not only one's opinions but also what one has assimilated from other persons' reactions.

The slogan for this year's budget (to be honest, I wish we could do away with such slogans as they may devalue the document) relates to the future, and more specifically to having a solid, firm, steady, sound (all adjectives meaning sod in Maltese) future. So the question that one rightly puts is whether this budget provides enough of a strong, clear and good direction to the economy and the country at large.

Does it show whether those responsible for the management of the country's fiscal policy know which direction the economy should be going and, if yes, whether this direction is the right one for the country and, again if yes, whether this budget is moving in that direction? Does this budget indicate that the government knows where it is going and that it has chosen the right path?

These are questions that go beyond how the budget measures affect each and every one of us individually in the immediate short term. These questions relate to issues that go beyond our immediate purchasing power but deal with issues such as, "will I be able to have a job in future?", "if I ever need to be hospitalised, will I be given appropriate medical care?", "will I have clean air to breathe and a healthy environment in which I can enjoy my leisure time?", "are my children's and grandchildren's interest adequately safeguarded?", "will there be an adequate social security net, if I ever fall on hard times?", "will the provision of educational services be strengthened and be made more relevant to today's world?".

If we want to talk of a solid, firm, steady and sound future, these are the issues that one would need to talk about. This does not mean that a short-term improvement in purchasing power is not relevant or is not important. Of course it is, because it impacts on our standard of living. However, it becomes irrelevant if such gains are short lived. Such an improvement in the standard of living loses its importance if the vision of the future is a bleak one - hence the link between the questions posed in the previous paragraph and the need to have a strong, buoyant and resilient economy, the need to have sustainable public finances and the need to adopt the euro in 2008.

For this reason the indicators that we need to be looking for in the budget speech and the supporting documents published by the government are the growth in real gross domestic product, the growth in investment, the growth in foreign direct investment, the growth in exports, the growth in private sector part-time and full-time employment, the growth in bank deposits, the relationship between the public sector deficit and the gross domestic product, and inflation.

These are all pointing in the right direction, with the exception of inflation. Pointing in the right direction means a direction that would enable the economy to continue growing, that would enhance the sustainability of public finances, and that would enable the country to adopt the euro, the only question mark being that related to inflation and its potential negative impact.

Do the budget measures facilitate the continuation of such positive trends into the medium term and long term. Again, one needs to mention inflation as a potential mine that could yet explode in our face. Apart from this issue, the measures do in their totality facilitate continued growth of the economy. The increased expenditure in education, the additional incentives for industry, the continued support to the tourism industry, the strengthening of the social security net and the changes in income tax and social security provisions should provide the right encouragement for further investment in the economy and for the labour force to increase.

When assessing the budget, two days after, one should also be mindful of the fact that, after all, a great deal depends on consumer and business confidence. This is because the government is intervening less and less in the operation of the economy. I strongly believe that the level of consumer and business confidence should improve as a result of this budget and the financial and economic data that have been published.

This does not mean that we should all be every excited about the budget. It only means there is enough in the budget to show that the direction being taken is the right one, and hence the economy can move forward without fear of hiccups, somersaults and u-turns.