Wednesday, 8th October 2008
Financial crisis will impact budget plans
The financial turmoil and gloomy international economic prospects will impact the government's budget plans, Finance Minister Tonio Fenech warned yesterday following a meeting of EU Finance Ministers in Luxembourg.
"We are witnessing an earthquake in the financial world which will definitely have an impact on economic growth worldwide. Malta is part of the world and we have to be realistic in the upcoming budget to safeguard the long-term interests of the Maltese economy," he said.
Without specifying how the international scenario will affect the government's plans, Mr Fenech said the economic situation today is completely different from that of a few months ago and the government will have to plan according to the prevailing climate.
EU Finance Ministers yesterday agreed to take common measures to counter the financial markets crisis, primarily addressing the need to strengthen the EU's principal financial institutions.
During their monthly meeting, EU Ministers agreed on an EU-wide deposit guarantee for savers of €50,000. This will also apply to Maltese depositors who until now were only covered for the first €20,000 of their savings.
The figure agreed is the amount of consumers' cash that will be protected in future if a bank crashes.
Despite the fact that the Maltese government is also mulling whether to go a step further by increasing the guaranteed deposits to €100,000, Mr Fenech assured depositors that Malta's financial institutions are not being hit by the current crisis.
"Malta's financial institutions have a very sound base and there are no indications that they will be hit by the current crisis. Our banks invest in bonds and stocks in very sound institutions and so there is absolutely no need to worry. However, we still agreed to put a further guarantee to put people's minds at rest."
Asked whether Maltese financial institutions have experienced any changes in the behaviour of depositors, Mr Fenech said no changes were observed and it was business as usual.
"'We are monitoring the situation closely on a daily basis and there is absolutely no sign of any significant changes."
EU Finance Ministers also vowed to step up cross-border cooperation in the face of banking chaos and declared that "the liquidity of the financial system shall be ensured by all authorities in order to preserve confidence and stability".
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Comments
As a maltese myself who lives abroad, but holds very close ties to the island, visits regularly and keeps very closely abreast with what it si going on, I find such comments uncalled for.
One thing living aborad thought me is that supposedly 'Maltese' problems are also felt and experienced away from Malta. It teaches one a humble lesson to look at the wider view.
Being abroad may earn you better salaries on paper, but it would soon evaporate when one factors in the much higher costs of living.
Most of the problems I see being commented upon are the same problems i hear here. Nothing different. Nothing new. Impact on societies in similar ways.
It is convenient to blame the maltese government for everything..until you realise that every coutnry and every government around the world are facing the same problems. nationalist or labour does not matter...both would have been faced with the same problems.
Another Maltese living abroad hater. Thanks.
Comes a day when I will tell you, Mr. Farrugia - I told you so.
Mr Martinelli is safe in his haven in Canada, and chooses to call our comments 'cheap talk' while he continually comments endlessly about all and sundry, about things in Malta of which he hasn't an inkling!
And he calls ours 'cheap talk'. What cheek!
He is trying to compare the 70s and 80s to what is happening today! While in the 70s the spike in the oil prices did cause havoc in the short term and recovery was relatively fast, there were no collapses in huge financial institutions worldwide.
According to him the government should not use this crisis as an 'excuse' to veer off the intended course for the 2009 budget ! He conveniently forgot to mention that the price of oil then was something like $8.00 a barrel compared to around $90 which thankfully came down from $147. That in itself is a crisis - adding the collapse of the financial institutions one can describe the situation as catastrophic. Mr. Daley expects the government to do nothing about electricity rates, but go ahead with reducing his taxes. Certainly, if we had a Labour government it would have cut the surcharge in half and not raised taxes far and beyond the break-even point.
Why accuse the government that it did not realize what was brewing in the financial world? Why did the MLP not predict this mess?
Cheap talk.
Well, now we are all warned, thank you very much. We cannot say we did not know, can we?
This is no excuse for the Government.
They never mentioned the Oil crises in the 70s and they never mentioned the world recession in the early 80s, so why should we be bothered with what is happening around us NOW?
All that PN did in them days was, criticise the Labour administrations even though we were the only country in Europe not to require rationing of fuel in the early 70s. That's how bad it was during the 70s Oil crises. What goes round, comes round!
The buck stops with the Government, as we now have confirmation, that the same Government have novices for ministers who are so naive as not to realise what was brewing in the financial markets since February 2007.
Finance minister says - Our banks invest in bonds and stocks in very sound institutions, unquote - SUCH AS?