We are fast approaching Budget Day. The data of the world’s leading eco­nomies seem to show that they are out of the recession that had gripped them for a good 18 months. However, the feeling in these countries is that they still do not know whether they are out of the recession or not. This indicates three things: First is the fragility of the economic recovery; second is the unknown nature of the economic recovery; and third is the lingering low level of business and consumer confidence.

The fragility of the economic recovery emerges from the fact that we are getting conflicting economic data. We are used to having all the economic indicators moving in synch. It is not the case now. The unknown nature of the economic recovery emanates from the fact that certain economic segments are performing well, while other segments are still retracting. Hence the phenomenon of uneven growth is not limited only to Malta. The lingering low level of business and consumer confidence is the result of the uncertainty that still persists. This is the scenario out there and our government is expected to take a policy stance for 2011 in this blurred scenario.

It cannot be an easy exercise to draw up a Budget for the country in such a scenario, especially since we do not have the comfort of a large domestic economy that can drive growth, irrespective of what happens beyond our shores. This is why I consider it important that the debate on the Budget is not polluted by other issues. If it were up to me I would suspend discussion on all the other issues until there has been an exhaustive debate on the economic situation of the country and the policy measures that need to be taken to sustain the economy and society in general.

This is not to say that the discussion about issues such as divorce is irrelevant; but we cannot afford to have it divert the attention from the fundamental economic issues that this country has to address. The Budget debate does not start on Budget Day but needs to start now. It is within this context that one needs to view the consultation meetings being held by the Ministry of Finance on the subject, following the publication of the pre-Budget Document in July.

The economy has to take centre stage for the next six weeks, and with it a recognition of what is the common (and not sectorial) economic good. We already know that the cost of living adjustment is just over one euro a week, reflecting the lower level of inflation in the last 12 months. So this issue is not the main concern now.

We can concentrate on whether there should be spending cuts, and if in the affirmative, where. We need to see whether there should be tax cuts, and if in affirmative, where. There need to be decisions on measures that serve as a stimulus to the economy. There also need to be decisions on social policies and whether these will be affected by any spending cuts. Obviously we would like to earn more money, pay less taxes and have free access to high quality social services. But any head of household knows that there is never enough money to do everything we want to do. The Minister of Finance has the same challenge and, therefore, needs to make choices. An honest, open debate about the economy that is not polluted by other issues will help him to make those choices.

The problems we are facing are not much different to those of other countries. Economic issues make up the main concerns of people and we cannot brush these away. Consumer sentiment has at times been weak and at times strong, sending contrasting signals. People also generally recognise that the manner in which government has handled this re­cession has been good. The issue of a sustainable fiscal deficit also haunts other countries. It was only this week that the chairman of the Federal Reserve (the central bank of the United States), Ben Ber­nanke, warned that the US government needs to take the appropriate decisions to reduce the fiscal deficit, as there is the risk that the situation may become unsustainable.

Staying focused on the economy at this point in time is critical. And the Budget is key to the management of our economy.

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