Budget to target social benefits
Single mothers singled out
The government was reviewing a number of social benefits in a drive to cut expenditure and keep the deficit in check, Finance Minister Tonio Fenech said, taking on board a recommendation by the International Monetary Fund.
Mr Fenech ruled out any changes to children's allowance, which was last year extended to every child irrespective of the parents' income, but insisted that benefits to single mothers would be reviewed. The drive would ensure benefits are paid only to those who deserve them, he said, hinting that means testing would be used in a more widespread manner.
He particularly mentioned benefits to single mothers, insisting that these should not act as a disincentive for mothers to enter the labour market.
"There are single mothers who are deserving of the benefit and we have to continue to sustain them but we have to make sure that the woman does not find it comfortable to remain at home with the government effectively paying her a wage," Mr Fenech said.
The government had to help for a period of time, he added, but the aim should be that of encouraging people to "integrate in the labour force".
The minister did not quantify the savings the government would be making through the review exercise and its impact on the deficit.
Speaking at a press conference during which he gave his reaction to a recently-published IMF report, Mr Fenech said income tax would remain as is.
The report, published this week, gave a snapshot of the economy and forecast that by the end of the year the Maltese economy would contract by two per cent. It also predicted a marginal growth of 0.5 per cent by 2010.
"This is not the time to increase taxes," the minister said, insisting that the deficit had to be contained by cutting recurrent expenditure. By doing so, he said, the government would find the money to invest in public infrastructure projects that would serve as a stimulus for the economy.
Mr Fenech cautioned against over-optimism about the country's economic prospects, insisting that the country was not yet out of the woods.
"The IMF has said that one of the risks of an upturn in 2010 was the fact that Malta's recovery very much depended on the recovery in other countries," he said.
There were positive signs in some eurozone countries but the recession was only bottoming out, the minister said.