Editorial

2006 seems likely to end on a positive note for Malta's economy, and obviously for its steward, Prime Minister Lawrence Gonzi, who also doubles as Minister of Finance. Last Friday, it was announced that Malta's annual inflation rate, for the first time in seven months, fell below the European Union's reference rate which new member states wishing to join the Eurozone had to register. This means that what was thought to be probably the toughest hurdle of the Maastricht criteria for Malta has now been overcome, and that the way to joining the European single currency on target - that is, by January 1, 2008 - is now clear.

The danger, however, is that there could always be a sudden jolt which could cause the annual inflation rate to rise again before the fateful date. But since it is well known that Malta's relatively high inflation was caused by the rocketing price of imported fuel, on which we depend totally, this is not likely to happen again any time soon because oil prices seem to have stabilised at a lower level than their record highs, and also because the US dollar - in which oil is traded on the international markets - is substantially much weaker now against the euro, to which the Maltese currency is pegged.

This does not mean that we are immune from further inflationary pressures. In the run-up to the euro changeover there is always the possibility of price adjustments to make up for already absorbed higher costs - caused, as we have seen, by higher prices for water and electricity and imported raw materials - and "insurance" against any price rises once the euro is adopted.

There still remains the matter of the national debt as a percentage of the Gross Domestic Product. In our case, this is running at about 68 per cent, when the convergence criterion is 60 per cent. Yet here too, the situation is expected to improve - gradually - as Government's borrowing requirements are expected to fall since the deficit in its expenditure drops comfortably below the threshold of three per cent of GDP .

Increased economic activity and growth in various sectors projected for 2007 are bound to reflect positively on Government's financial position. An improvement here could be translated into an "election Budget" towards the end of the year, with meaningful tax relief and other measures providing additional stimulus to the economy.

After all, Dr Gonzi himself last Sunday spoke "enthusiastically" of an "exceptional year ahead", as he announced that Malta could start drawing its share of funds from the 2007-13 EU budget - totalling €855 million - as early as January. Indeed, Malta has done its homework well regarding projects which would benefit from EU funding.

The Prime Minister explained that sectors like education and training, health and the infrastructure, in particular, are set to benefit hugely from EU funding.

Also, the SmartCity project - the agreement is to be officially sealed next month, one understands - should be up and running in the new year. Besides, the state-of-the-art Mater Dei Hospital should meet its target opening date of July 1, and other investments, already made - such as Lufthansa Technik's impressive expansion plans, and the HSBC call centre - and others expected in the course of the year, should contribute handsomely to the island's economic growth, whose rate has now surpassed the EU average.

Nor should one omit the expected recovery in tourism - from an admittedly gloomy performance for most of this year - thanks to the arrival of low-cost airlines and more aggressive and more focused marketing.

What is still sadly lacking, one feels, despite the improving economic scenario, is a lack of teamwork; i.e., the nagging feeling that although every single one of us should be responsible, in their own way, to contribute to a more cost-effective, competitive, efficient and hospitable product - be it in tourism, retail and other services, manufacturing and other sectors of the economy - not everybody is pulling the same rope in the same direction. It is as if the efforts of some are nullified by the selfishness of others, who seek only their narrow, sectarian interests rather than those of the nation as a whole.

There is no better example of this than in tourism, where one single bad impression given by a morose, unsmiling service provider, or a single case of blatant overcharging, can nullify the efforts of those who strive to make this industry a success. We feel that with more dedicated all-round effort, we can make it. This should be our top New Year resolution.