Opposition finance spokesman Karmenu Vella said yesterday he feared that the European authorities were trying to solve the immediate financial crisis, without resolving the underlying economic problems. In so doing, they were only postponing the problems, instead of solving them.
Failure to pay back debts by the affected countries meant a threat to all EU member states and to the stability of the euro.
He called on the Maltese government to be transparent and keep Parliament updated on developments. The importance of the issue was significant since Malta had economic relations and monetary relations with some of the countries, he said.
The opposition’s position was always clear, mainly that there should be economic stability especially in the eurozone with a strong currency. This should be Malta’s interest.
Mr Vella said that while some countries tried to solve the debt crisis on their own, Greece called for a bailout amounting to €110 billion. This amount had to be shared between the EU and the IMF with the EU having the biggest burden of €80 billion.
Malta’s share was being given without any guarantees, he said, and Malta’s only hope rested on the results of the austerity measures. However, without the Greek citizens’ consent, the austerity measures would not work even though this was expected to improve their financial position.
Mr Vella said it was important the money given by Malta would not be reflected in social benefit reductions or in higher taxes. This was more so since Greece needed a second bailout and Malta’s share would be of €75 million.
If the financial crisis was to spread to Spain and Italy, then the eurozone situation would be worse, he said. This was because Italy and Spain had huge debts, with Italy’s debt being six times greater than that of Greece. This was an important consideration since Italy’s and Spain’s debt could amount to 25 per cent of the eurozone’s GDP.
Mr Vella called for stricter EU surveillance and monitoring; more accountability and transparency should be employed. In this respect he asked Minister Fenech whether he was satisfied with the austerity measures’ results. He also called for more information to be presented in Parliament with regard to the work which has been carried out between the ministry and the local central bank.
He also called for a statement on capping, if any, which Malta was to adopt. Many proposals were being put forward, including the inclusion of the private sector in the bailouts. What was Malta’s position?
All governments should learn from the Greek experience. One could now realise that if bad governance and debts were not addressed then Malta could face the same situation. Also, Malta should not be penalised if, because of the Greek bailout, Malta surpasses the debt limit. Mr Vella said there was a difference between what a country wanted to do and what a country could do. Malta’s commitment currently amounted to €850 million. Since this was not a small amount, the government needed to be more transparent. More economic and financial attention should also be employed and one had to acknowledge that being a member of the eurozone did not mean that a country was untouchable.