Greater expenditure than that planned in the first seven months of the year has given rise to concern over the government's financial targets, with some arguing it looks that they would not be met, while others feel there is still time to make up for the shortfall.

Although most of the revenue generally accumulates in the final lap, the sharp rise in expenditure has fuelled speculation over the possible net result at the end of the financial year. After managing to meet the Maastricht criteria, qualifying Malta for euro adoption, one of the government's aims now is to have a balanced budget by 2010. Actually, in the pre-budget document the government says it aims to have a surplus by that date.

The Prime Minister has said the government is determined to control expenditure. In one recent report, the International Monetary Fund has suggested the government take action on three fronts: tackling subsidies, which, it says, amount to twice the EU average, and state aid, four times the EU average; the public wage bill, amounting to 13 per cent of gross domestic product; and age-related and other social spending. Savings from pension reform would not be felt until some years from now and it therefore felt that market-based measures to rationalise demand and increase the efficiency of supply of public services, particularly in health care, may need to be considered if administrative cost control measures proved ineffective.

The government has taken action in a programme aimed at reaching the set target but, as in the case of the privatisation of the shipyards, the way forward is not exactly plain sailing because the move involves not just the transfer of physical assets but also the future of the workforce.

Raising the energy prices, up to now considered as surcharge but which is planned to be incorporated in a general tariff revision, will also help the government recoup at least part of the subsidy given to the energy corporation.

It remains to be seen whether the government meets its financial target or not but, at least, it is not keeping back from moving ahead with reforms that would enable it to continue to operate, in its own words, in "a sound and sustainable manner".

In the case of the shipyards, the government has no option but to see how it can save the enterprise after the end of this year, after which it will no longer be allowed by the European Union to continue subsidising it. The agreement reached with the workforce's union, the General Workers' Union, last week, marks a step forward in the 'yards' privatisation plan but, as the Prime Minister pointed out so well, it has not solved the problem. The government has yet to find a buyer. The early retirement schemes will now cost more but, at least, the process can go ahead without the hiccups the GWU threatened to present at its meeting for workers in Paola.

Set against the concern expressed over the government's finances, the latest official figures show that the economy continued to grow in the second quarter this year, by 3.2 per cent in real terms. However, most economic activities are said to have suffered from rising oil and cereal prices but, thankfully, other lines helped keep the rhythm up.