Widespread concern over corruption claims, sheer maladministration and lack of good governance are seriously threatening to shift the country’s focus away from matters that need urgent attention. Regardless of the national concern over the corruption claims, the government may well go on with its work as if nothing is happening. That is its choice but the country has been galvanised by the allegations being made.
Quick action is therefore required to ensure good governance at the top of the administration, something the Prime Minister is refusing to do. Further delay could cost him, his party and the country dearly.
Take Panamagate, the setting up of secret companies in tax havens by the Energy Minister and the Prime Minister’s chief of staff. The saga has unsurprisingly overshadowed the latest economic indicators showing that the country’s performance last year exceeded expectations. A rise of 6.3 per cent in the gross domestic product last year was described by the Prime Minister as a historic high and by others as fantastic.
Considering the growth rate in the rest of the European Union, Malta’s rate is most satisfactory. But while it would be foolish to dismiss the significance of such growth, it would also be very ill-advised for politicians, including Joseph Muscat, to go euphoric over the rise because, as explained in this newspaper by the head of the economics department at the University of Malta, a contributing factor was private investment in the new gas power station. He said that, with an investment of €300 million, the impact is significant.
This was also remarked upon by a European Commission working document when it said that, although household consumption and net exports had been the main engines of growth, one-off large-scale projects in the energy sector and the finalisation of EU-funded projects boosted investment in 2014–2015, thus also contributing strongly to the expansion of the economy.
In assessing the growth rate, therefore, account has to be taken of the contribution that one-off projects make to the economy over particular periods. Although there may, of course, be other one-off projects that will help keep the economy going at such “fantastic” or “historic” growth rates, it is best also to be realistic and think ahead by ensuring that when the number of such projects fizzles out, as it probably will in the end, the country will have other sources to support new growth.
It is precisely to ensure such growth that the country has, over the years, been creating new economic lines. This is also why Malta was able to withstand the shocks of the financial storms that hit other countries in recent years.
The island needs to continue to diversify its economic structure to create a healthy economic mix. It also needs to continue to support the manufacturing industry so that, as it has done over the years, it will keep adapting to new times.
In the context of the GDP rise last year, it is disappointing to learn that manufacturing dropped by €2.9 million, or 0.4 per cent. At the same time, seasonally-adjusted industrial production was down by 4.6 per cent in the first month of this year compared to January 2015. Of course, the trend will become clearer when the figures for the first quarter are issued.
What counts most now is that the government avoids taking any further actions that go against good governance so that the country will be able to keep moving forward.