Deficit up by €80m in first quarter

Can I first and foremost say that Labour knew of the problems looming in the economy and it was wrong not to bring the economy into the agenda during the electoral campaigne. Part of this problem was Sant, because he had decided to leave the economic agenda to one side. In so doing, a large number of the middle class thought that not all was doom and gloom in the economy, even though they used to read of an economic global downturn. During the election a picture of denial by both political parties was portrayed regarding the Maltese economy.
As predicted by well known economists, the deficit can only go up and not down. Part of this new problem is going to be compounded by the introduction of the Euro. Does one agree to have the Euro or our own currency? This is now irrelevant, this is the situation now and one has to dance accordingly. Why? Our economic problems are structural and not simply seasonal. Inflation is now looming in the Euro Zone and this will result in higher interest rates, which will increase the value of the Euro even further and therefore play havoc with our Tourist Industry by the end of this year. The increase in interest rates to control inflation will also play havoc with our already lame housing market. To make matters worse our manufacturing industry has been shrinking for these last 10 years therefore less foreign funds coming in.
Contrary to what we had been promised during these last 17 years, the economy is more dependent on Government expenditure then ever before, and therefore if the Government even freezes it’s expenditure when it is desperately needed to boost employment, we shall go into another recession with our small disposable income being eroded even further.
The other problem is the ever increasing sum to service the National Debt which has already gone up to nearly £m100 a year. Besides this there is no sign that the National Debt would ever be reduced, in fact I predict that by the end of the year we will again break the EU rule of 60% vis-à-vis our GDP. The Government has been living beyond it’s means for a very long time, and just like someone who keeps borrowing on a massive scale, there comes a time when one has to make great sacrifices to pay one’s dues.
One might argue that even other EU countries have the Euro, but there is a very big difference in the way our economy generates wealth. We have no heavy industry that other countries depend on, not much food that we can export, no natural resources, other then sun and beaches for our Tourism.
Is everything doom and gloom? Well, if one can survive this until the Euro starts loosing value and the Tourists start flocking in again, then maybe! But then the question remains. When we were being told that the economy is doing well, that it is strong, why did the Government not put some dosh away for a rainy day? The reply is simple. We had too high a National Debt for any reasonable amounts to make any difference. So far it looks like we do not have much of a roof on our head and it is already leaking badly. One wonders how bad will it get if we’re in for a downpour, as predicted by the IMF!
One thing is sure, and that is our disposable income is going to shrink faster then before, because our salaries are still less then half when compared with other EU countries, unless of course I am wrong and we are going to be surprised and get a 15 to 20 Euro increase a week in the next budget! Now why does one not see that coming?

If these numbers are what was meant when during the election period we were told that the economy is doing well, that now that we are within the EU financial parameters as regards the Euro the next step is to have a break-even government accounts by 2010, possibly even with a surplus, etc etc blah blah blah , then Thank God we weren`t doing badly !!!

An increase of €80 million in deficit for a three-month period is incredible !! It means that if from €120million it shot up to €210m, then there was a 50% increase !!!! And this for the first three months only !! One starts to wonder whether payments were held back to be in the Euro-acceptance parameters in the past, or whether this deficit is due to an increase in activity, projects, back-payments, etc caused by the election-rush and to induce an feel-good factor.

In a one-year period the total deficit increased by €93.7 ... and this when were told that ad nauseum that the Government has now the finances under control !!!!

Does this mean that now we will be told some kind of excuse to justify why this situation was hidden to the people before the 8th March ? Its impossible that the Prime Minister didn`t have a clue of what was happening .... so he was either giving a distorted picture, or else he was honest but without control and responsibility.

Now.... what is the next step ? Will we be told that unfortunately "iz-zmien li issa niehdu il-frott" has to be postponed and that we will see another increase in taxes to make up for this ? (If the economy slows down ,there will be less income from taxes so unless the government controls the expenditure, the only way to counter the deficit is to increase the VAT rates). If we are in this financial position well before the promised tax-bands revision took place, what will happen then ? Will Mr. Dalli now tell us that unfortunately the free health sector is not sustainable anymore ?

Barely seven weeks have passed since we last heard all the sweet talk ! Now it seems that we were either living a dream, or else we were taken for a ride by being told a fairy tale !!