Editorial

The budget for 2007 may not be the perfect election budget many might have expected but, on the basis of the facts and figures given by the government, it does reflect progress.

In fact, a closer analysis will show that it is even better than expected, at least in terms of the favourable measures the government is taking in the wake of an improved economic performance and a healthier financial situation.

The measures the government has announced will cost it Lm4 million more than it had first projected, up to Lm12 million. More than 17,000 low-income families are to benefit directly from a fuel subsidy and many others are to benefit as well through the changes being made to the income tax bands and the education tax relief. This is over and above the Lm2.25 cost-of-living allowance.

It takes courage to write off the positive turn the economy has taken and the measures the government has been able to launch, even though, as it is well known to all, there are weaknesses in the economy that would need to be seen to with greater determination than that shown so far.

Calling the budget weak and hollow, as Labour Party leader Alfred Sant did immediately after its presentation, impresses no one. Labour have become as predictable as night follows day.

Having pumped up expectations for so long, they now perch themselves on high ground to take their shots at the budget, feeling morally justified in their attempts to wipe out the grin from the faces of Nationalist politicians.

Labour are in no mood to take the word progress at face value and are now likely to embark on a dissection exercise to prove that the overall picture is not after all as rosy as the Nationalists paint it.

In truth, Labour are usually greater experts than the Nationalists when it comes to inflating capabilities, as shown by their leader's penchant for declaring to the four winds that if elected they would do this or that within six months, though Dr Sant appears to have stopped doing this now.

This does not mean that the Nationalists keep back from gilding the lily. All politicians do so, to varying degrees. The difference this time is that Malta forms part of the European Union and, as such, performance is closely monitored, leaving very little space, if at all, to over-gild the lily, as might have been the case in the past, not to mention too the monitoring that is done by credit rating agencies.

If inflation goes up to beyond the EU reference point, the French mint contracted to produce Malta's currency would not be given the go ahead. Whether Malta will make it or not to the eurozone has yet to be seen and, in any case, the government feels confident it will once the reduction in the price of medicines and in the fuel surcharge starts to make a difference to the people's pockets.

Marking time on the eurozone perimeter would not do the country any good, so reversing the inflationary trend is a challenge the country has to take up in earnest.

Besides these considerations, and the personal computations over the degree people are expected to benefit from the changes announced in the income tax bands, there are other measures in the budget for next year that fit well within the government's overall programme to help bring about greater economic activity. Attention would now have to be focused on the sectors that require it most, such as tourism, the environment and ports, besides on the overall need of containing inflation.