Editorial

As Labour politicians continue to raise great expectations ahead of the forthcoming budget for next year, the government appears dead set to be financially prudent, producing a budget that would hopefully help speed the transition to a situation where the economy would be able to pick up its growth rhythm again. The government has been strongly criticised by many, including this newspaper, over the past months about a number of issues seen by many to have been badly tackled but on this matter of the budget it should ignore the opposition's political game of trying to raise expectations for a good budget when it knows only too well that the country cannot afford at this stage to be liberal in dispensing finances raised from the taxpayers.

Labour, and some trade unions, too, are wrong, very wrong, in following this route, as raising expectations unnecessarily can do harm to the effort that is needed to consolidate the government's finances.

Labour politicians generally act as if Malta has escaped the impact of the slowdown when facts and figures show otherwise. Malta is, in fact, still in a recession and even though performance in a number of countries of direct interest to Malta, such as Germany, is improving, it will naturally take time for the island to start feeling the effects.

Even though economic sentiment in Malta declined in September, the Finance Minister has reported that there are now indications of an improvement in manufacturing as new orders were picking up. The government's major pre-occupation is, naturally, over its finances. It is also making the generation of new jobs one of its topmost priorities.

With revenues down, the government is expecting a deficit of 3.8 per cent this year according to its pre-budget document. If the final figure tallies with the forecast, the deficit will be lower than that for last year, 4.6 per cent, but the European Commission has given Malta up to next year to correct the deficit. However, considering all the demands placed on the Exchequer, particularly the surging expenditure involved in the running of welfare and health services, not to mention the investment the government plans to pump into projects meant to generate new jobs or stimulate growth, it is unlikely the government would be able to go back to below the threshold established by Brussels by the end of next year.

The minister's aim, as explained in a recent business breakfast, is to ensure stability in the government's finances. In what was possibly one of his best contributions in recent weeks, the minister, Tonio Fenech, argued the government could well do as other countries had done and raise the deficit. But if Malta were to do this, it would be even more difficult to get back to growth and reduce the deficit. He was quoted saying: "It is true that the rules say that the country must have a less than three per cent deficit. It will be difficult for the coming budget to promise that but, even so, the government must exceed that limit in a responsible way".

This ought to remain his guiding light, an argument strong enough to ward off, if well put, any political attempts from the Labour Party to deviate it from this route. As budget day draws nearer, such political attempts will increase as Labour, playing to the gallery, call for measures that can well derail the government from this course. It should strongly resist such moves.