The way a country should run its financial affairs is fundamentally no different to the way a family, person or a business should. A comparison to a business is more appropriate as it affords a measure of complexity.

The numbers are beyond critical point and can only get worse given the government’s propensity to run at an annual deficit- David Marinelli

We accept that a business should run at a profit and that financing a loss year after year is nonsensical. We accept that a business should mostly spend money on items that will directly or indirectly generate revenue; doing otherwise would provoke a cycle of decreasing revenue. We accept that a business should not borrow what it cannot foreseeably repay.

A government is not a for-profit organisation as it provides a public service such as social and infrastructure-related services. It is for this reason that it should only provide the services it can afford. Secondly, and because it has an obligation to provide services, it should ensure that any surplus is directed to tax revenue-generating endeavours.

How else can it expect to continue to provide and improve its services? This it should do while keeping in mind that it is there to serve and not to multiply and grow out of all proportion to the country it is there to manage.

We irrationally adopt an altogether different measure when it comes to government finances. We do not question an annual Budget that forecasts and realises a deficit year after year, increasing both debt and interest costs. We do not question why government spends tax money in areas that do not create jobs and growth, both of these being essential in generating tax revenues.

We do not question why government borrows ridiculous amounts of money (Q4 2011 – €4.6bn) with no thought given to repayment ever. We do not question the resulting prohibitive annual interest burden (2011>€200m) that is allowed to increase to the point that government needs to borrow in order to repay the interest.

The debt-to-GDP ratio has become an iconic number much used and abused by all. I will add my voice to the chorus of abuse by applying common sense criteria and principles.

Is there any reason why guarantees by government as security for government corporation debt (Q4 2011 – €1,074.9m) should not be added to the national debt figure? If this debt is not government debt what is it exactly? What is the reason the net payables position at any reporting date (Q4 2011 – €109.1m) should not be added to the debt when this is clearly contracted and a government running at an annual deficit must necessarily borrow to pay it? Is there any reason why Malta’s committed investment in the European Stability Mechanism (€512m) is not to be added to national debt number when Malta has a legal obligation to pay it on request and must borrow to pay it?

Through the special purposes vehicle Malita Investments plc the government is borrowing with greater transparency, directly, €40 million from the European Investment Bank. A debt is a debt by any other name and it is irrelevant whether it is called a guarantee or a payable rather than a debt.

I would like to present a slightly modified version of the Debt-to-GDP ratio. Let us call it the Adjusted Debt-to-GDP Ratio, one that includes committed debt. This calculation moves the ratio from the tidy figure of 72 per cent to 90.5 per cent as at December 2011 and to 100.2 per cent as at March 2012.

The ESM callable capital and the Malita-EIM finance may be attributable to a later period however any variation this may cause would not be material for the purpose of the argument as it would only shift the numbers to Q2 or Q3 2012 with the same overall result. The numbers are beyond the critical point and can only get worse given the government’s propensity to run at an annual deficit.

We expect the government to feel sufficiently accountable to engage in an honest exchange on these matters with the electorate and we expect the Opposition to be intelligently critical.

As an electorate we would all stand a greater chance to focus on the more important issues if we were not continuously distracted by spin doctors.

The PN’s “Labour Won’t Work” slogan is, at best, an interesting albeit shallow pun on the word “work”. The PN has been in government for 25 years since 1987, except for the two-year interlude and missed opportunity for the PL in the late 1990s. Whatever the country’s economic state today, any success or failure can only be traced back to the PN.

As a result, any claim that the PL has any merit or demerit in relation to the country’s current economic situation is an absurd notion. As is the implication that the expected unemployment could in any way be placed at their doorstep. It is understood that every government since independence has contributed to set up the infrastructure that today drives and supports our economy. This is not what I am referring to. I am referring to the dynamic part of the economy such as deficits, debt, growth and jobs.

The Opposition’s billboards are focusing on matters of micro management when they should be focusing on issues of national importance. There are pressing issues that threaten our economy and way of life and one has to prioritise as the pre-election time window for discussion is limited.

We all anxiously await the PL to spell out what its policy on the fundamental issues of deficits, debt, growth and jobs is going to be. I am ready to give them the benefit of the doubt and to accept that they may be biding their time so as not to prematurely show their hand and give some advantage to the PN. Hopefully we do not have long to wait and also hopefully it will have been worth waiting for.

The government may be granting yet another license to drill for oil. Why is it that every time the PN is in a corner the oil drilling card is played? I have been around long enough to have seen this happening at least four times in the past 25 years.

I would ask all the honourable elected gentlemen and ladies to treat the electorate with more respect and to seek to educate and not to exploit it.

I ask for a constructive discussion on the pressing issues and not waste precious time and even more precious borrowed money on parliamentary theatrics or on a new theatre in which these can be performed.

Note: GDP Q1 2012 is annualised
Source: Central Bank Of Malta and National Statistics Office

Mr Marinelli is chief executive of Portman International, a financial services group.