Prime Minister Lawrence Gonzi yesterday moved the first reading of a Bill amending the Constitution which will impose balanced budgets.
Reporting back to the House on Monday’s informal EU summit in Brussels, Dr Gonzi said the amendments would feature the provisions laid down in the fiscal stability and governance treaty agreed by 25 EU heads of government. The pact is expected to be signed in March.
The Bill, seconded by Deputy Prime Minister Tonio Borg, aims at ensuring that governments present balanced budgets, known as the Golden Rule.
The government and the opposition were to hold talks on the text to be approved, on the level of entrenchment of the amendments in the Constitution and also on when the Bill would come into force, Dr Gonzi said.
Opposition declares it will support the constitutional amendments
Opposition Leader Joseph Muscat declared that, despite the prevailing political situation, the opposition would keep its word and would support the constitutional amendments even though the government had not managed to garner a majority in the House.
Dr Gonzi warned permanent secretaries and chairmen of government entities about their duty to make proposals on how the €40 million in cuts from the current expenditure could be made.
They must not give reasons, he said, why this was not possible. He expected everyone’s cooperation on the matter.
He said the text of the European Stability Mechanism treaty had been discussed in detail in December and published by the European Commission yesterday morning. The mechanism would be enforced in the member states that were ready to ratify it. Malta’s Permanent Representative in the EU was to sign the treaty today.
The Prime Minister criticised the Opposition for claiming that the EU statement was an afterthought when significant events had taken place in Europe and other countries since the December summit. He said this showed amateurism and superficiality by the Opposition.
Belgium had declared it had entered a recession while Malta had obtained sustainable results when compared to other EU states.
Charles Mangion (PL) noted that the Financial Times had called on European leaders to take additional measures. Dr Gonzi retorted that the paper had not always been correct. He said that, while Malta had not increased VAT, France had changed it to 21.2 per cent.
Dr Muscat said both sides would hold talks on the text of the amendment to be agreed also with the legal services of the European Commission. The House had to be prudent also on the timing of when this amendment would become law.
He asked for details on how the €40 million cuts in current expenditure would be implemented.
He also called on the government to explain how the Valletta entrance project – amounting to €80 million – was to be financed when this had been absent from the budgetary estimates for two consecutive years.
The EC had said that government projections in the budget were not achievable. The IMF had also refused the government’s forecast on economic growth on which the government had based its budgetary projections.
Dr Mangion asked how the government would implement its obligation to bring the deficit below the 60 per cent mark of the GDP when today it amounted to €5.5 billion or 85 per cent of the GDP, including the guaranteed debts.
He said that aid on the purchasing of photovoltaic cells was reduced from €3,000 to €2,700.
He asked the Prime Minister for the government’s plans for job creation and economic growth when the EU was allocating €20 billion. Governments had to present such plans by next month.
Labour MP Alfred Sant asked why the Central Bank had increased its €260 million loan to the IMF in December. He called on the government to table a copy of the ESM Treaty. He also asked for Malta’s obligations under the treaty.
The Prime Minister here referred Dr Sant to the text published in the morning by the Commission.