Finance Minister Tonio Fenech explained today that in his preparations for the Budget, he was constrained by the fact that he has to shave off €100m from government expenditure since a reduction of €60m, would be needed to bring down the deficit and Air Malta would require between €30m and €40m next year.
The minister did not explain the spending on Air Malta. The airline was loaned over €50m in a measure approved by the EU earlier this year, and talks on the restructuring of the airline are currently under way with the European Commission.
The minister explained his constraints during a business breakfast in Gozo when several of those present called for greater government spending in several areas.
When asked how the government planned to reduce the deficit, Mr Fenech said the emphasis would be on incentives for economic growth and fiscal prudence.
The government is hoping to reduce the deficit to 2.2% of GDP, thus easing its borrowing requirement. The deficit is currently just under 3%.
Mr Fenech said in reply to various questions that the government is reviewing trading licences and ways how it may grant incentives to businesses.
He welcomed the fact that some 700 businesses had benefited from the microcredit scheme with some 200 business in Gozo having benefited from credits on up to 60% of their tax on investment, compared to 40% for businesses in Malta. This represented investment of over €30m by the Gozitans.
The minister also observed that that had been an 18% increase in the number of Maltese spending more than one night in Gozo and that, over the past three years, 800 Gozitans took up jobs which were advertised by the ETC.
Over the past two years, 676 women in Gozo returned to work, saving €750,000 in taxes under the tax incentives offered to women who return to their jobs.
When he spoke on the economic scenario, Mr Fenech said that while the Maltese economy was doing relatively well, one had to be cautious because of the fact that several of Malta's main trading partners had economic problems.
During the activity, Mr Fenech heard calls for a new centre for SMEs in Gozo, more favourable trade licensing terms and a one-year waiver on stamp duty to boost the purchase of property in Gozo.
Other suggestions included investment on cruise port facilities and on a yard for the repair of yachts and fishing boats in Gozo.
The Government was also urged to introduce a fixed wing air service by building an airstrip in Gozo.