A smooth changeover

This week the President of the European Central Bank, Jean-Claude Trichet, and of the EU Monetary Affairs Commissioner, Joaquin Almunia, visited Malta. Their comments, as reported in the media, indicate that these two distinguished persons, who have the responsibility to ensure that any country joining the eurozone, as we shall be doing on January 1, next year, does so in an orderly manner, while meeting set criteria in a sustainable manner, believe that the euro changeover in this country is proceeding smoothly.

The European Central Bank President was reported to have stated that Malta's journey towards the euro adoption was remarkable and that the ECB was particularly encouraged by the Maltese government's commitment to keep on working actively to improve the economic performance while maintaining a tight hold on fiscal policy.

The EU Monetary Affairs Commissioner stated that the tasks ahead were demanding, but is convinced that the government would continue working towards successful results. Both personalities praised the work done on the changeover and the smoothness with which this changeover is being done.

The developments of the past months do, in fact, show that the changeover from the Malta lira to the euro as our national currency is a smooth one and is expected to continue moving smoothly in the coming weeks. It is very positive that this success has been noted by persons usually known for issuing warnings to governments that are not keeping in line with commitments made. However, it is critical that this smoothness in the changeover is something that all of us should be convinced about.

Awareness of the changeover amongst the general public is very high, while the business sector reports that preparations for the changeover are well in hand. The banks are evidently gearing themselves to handle the changeover, given that they will have a very significant role to play to ensure that the new currency is introduced with little or no hitches. There is no doubt that there is a lot of positive feeling and expectation about this project; a project that is bound to affect the way we live in a number of ways. We speak of the adoption of a new currency; but in truth we are speaking of a different way of doing business which should attract further investment and create more job opportunities.

The adoption of the euro is not happening in a vacuum or in a time warp. It is happening because we are members of the EU and the adoption of the euro will mean further integration within the EU. Moreover, the stringent criteria that need to be met to join the eurozone are such that we can confidently state that the adoption of the euro is happening because our economy is performing well, with a rate of inflation that is under control, with a sustainable level of fiscal deficit.

Another important development is the price agreements entered into with a number of importers.

These importers have guaranteed that their prices would be maintained until March 2008, thereby ensuring that we would not have any price increases resulting from the euro changeover. These agreements may not have been to the liking of some, but they should definitely be to the liking of consumers, given that we would enjoy price stability during the period of the changeover. These agreements are in themselves a proof that the changeover is a smooth one.

It is to be noted that these price agreements were preceded by the FAIR campaign, whereby for a number of months retailers have been encouraged to display prices in both the Malta lira and the euro, thereby ensuring price transparency.

We are on the eve of the 2008 Budget. Some expect it to be a pre-election budget, but I attach more importance to this budget, as it is the budget of the changeover.

It is the euro budget and my sincere hope is that it is a budget that seeks to strengthen the economy on the basis of our past successes.

Fiscal prudence needs to be evident in the budget, but so should measures aimed at enhancing economic performance.

Such a budget would make the euro changeover smoother than it already is.