Tough budget decisions ahead

Finance Minister Tonio Fenech this morning hinted at tough decisions ahead saying that the budget was to be drawn up in a difficult situation at a time when the economy was going through a difficult period.

Interviewed on Radio 101, Mr Fenech said:

“We, have to keep our feet on the ground... The economy is the government’s priority. This is the time to incentivise it and give it the necessary substance.

“This is not the time to be aggressive on the economy and it does not make sense that to solve a current problem we create a longer term one, he said.

Mr Fenech said that the first meetings on the pre-budget document were to start next week.

He said it was true that there were positive signs which showed that the economy had started to slowly recover but one had to move cautiously.

Although the government did not believe that it should increase the tax burden unnecessarily, the alternative solution was to reduce subsidies. “Why should I assist someone to pay a bill he can well afford to,” the minister asked.

While the government wanted to help those in need, it did not want to assist those who were not.

“If we do not want taxes to increase we have to pay for what we consume,” he said adding that contrary to the impression the opposition tried to give, it was not true that Malta was among the most heavily taxed countries in Europe. EU statistics showed the contrary, Mr Fenech said.

On the shipyards, Mr Fenech said that two companies had re-submitted an offer to take over ship repair and these were now to be evaluated.

He said that there had been initial problems with three companies expressing an interest but making minimal offers with a poor investment plan which did not satisfy the privatisation unit.

The government spoke to these companies telling them it had obtained a professional estimate of what offer and investment it should expect and the companies were given until the end of the week to submit their offer. Two did and if they accepted the conditions set by the government, the process could progress.

The minister said that employees at the shipyard were working on a week by week contract and the government’s order to the shipyard was not to accept loss making projects.

On the proposed agency to counter price abuse, Mr Fenech said this would not be able to control prices.

The structure the government was proposing would be a watchdog on the Office of Fair Competition and on the market, ensuring there were no cartels and listing shops that were selling for cheaper, helping consumers make their choice.