In Parliament, a few days before the House rose for the Christmas recess, Finance Minister Edward Scicluna gave a string of facts and figures showing that things are looking up on the economic front. This is all to the good and should boost further national confidence this year, which, according to the European Commission, is set to continue registering further economic recovery across Europe.

Particularly significant in the minister’s economic assessment was a remark that calculations based on Treasury figures gave him confidence that the government was expected to reach its goal in reducing the deficit to less than three per cent, as required under EU rules, by the end of the 2013 financial year.

This runs somewhat contrary to the sentiment expressed by the European Commission some time ago. The year 2013 is now over and it may not be long now before the country knows exactly how it fared.

But what of the government’s projections for 2014?

While the government is confident that it is on the right track, the Commission does not share its views entirely. This is what Economic and Monetary Affairs Commissioner Olli Rehn said when he was giving the Commission’s reaction to the Budget for 2014: “Malta appears to have taken effective action but our analysis still shows a risk of non-compliance.” This is straightforward language.

Another categorical statement by the commissioner that leaves no room for quibbling is: “As regards the long-term stability of public finances, decisive policy action is still missing.”

At the time Mr Rehn made these remarks, the finance minister was reported saying at one point: “This means that we have to prove that our projections are right because if we slip in 2014 we will lose everything.”

The Commission’s reaction may not exactly be music to the ears of the government, which for so long during the election campaign had boasted that it had a road map that would lead Malta out of the deficit problem. The EU’s reaction was bad news to the government at the time it was made but the finance minister sounded somewhat unaffected by the criticism.

The Commission, still unconvinced by some aspects of the Budget, stood by its projections that the deficit for 2013 will be of 3.3 per cent, and for this year, 3.4 per cent, that is, above the threshold allowed by EU rules. However, the government stuck to its own forecast – a deficit of 2.7 per cent for 2013 and of 2.1 per cent for this year. These, said the Commission, were better than those that had made it impose the excessive deficit procedure earlier this year. Still, in its view, it was not clear how these results would be achieved.

The government has now had ample time to go into the details which the Commission had found to be missing and will hopefully correct its programme so that the country will meet the targets. It ought to start giving a lead in cutting cost by trimming the size of the Cabinet and checking the growth of quangos and committees that seem to be proliferating. It would be interesting finding out how much these are costing the government.

The cost of an ever-expanding administrative structure, cutting income tax and raising stipends are all adding undue pressure on government’s finances. It is important that the government meets its deficit targets because the risk of “losing everything”, as the finance minister put it, is not a cheerful prospect.

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