€4 wage increase, balanced budget target pushed back as deficit widens

Finance Minister Tonio Fenech this evening announced a pay rise of €4 per week as the cost of living adjustment.

He said in the budget speech that inflation in September stood at 3.73 percent. Although, according to the established mechanism, the COLA adjustment was to be €6.41, the 2008 budget had seen the government grant €2.33 in advance, so that the pay increase for next year would be €4. The increase would be given in full also to pensioners, the minister said.

The minister said the Maltese economy grew by 3% this year but is expected to slow to 2.5% next year.

In a review of economic performance, he said unemployment in the year to September dropped to 5,390 from 5,940 in September last year.

Total revenue this year was projected to be €2,384,565, which was more or less in keeping with the original projection of €2,410,818.

Expenditure, however, rose to €2,528,675 from the original estimate of €2,479,242 owing to increased spending on the extraordinary subsidies for Enemalta and Malta Shipyards.

As a result, a deficit which was projected to reach €68.4 million rose to €200 million.

The deficit as a percentage of GDP rose from a projected 1.19 percent to 3.49 percent.

For next year the government plans to reduce the deficit back to €98.8 million or 1.65% of GDP.

However plans for a balanced budget have been pushed back by a year to 2011, the minister said.