If the EU were to impose an Excessive Deficit Procedure on Malta it would restrict the island’s room for financial manoeuvre, Shadow Finance Minister Tonio Fenech warned yesterday.

Had it analysed the situation better the Labour Government could have avoided such a situation.

It still had time to reduce the 2012 deficit, which he reiterated should not surpass 2.7 per cent of GDP.

Speaking during the first of a two-day debate on the Budget, Mr Fenech warned that if Malta was not seen as financially stable, it would be classified with countries facing financial turmoil, which would be prejudicial to the economy.

He said some €6 million of the €10 million increase in Budget 2013 was due to the bigger Cabinet. This would lead to an increase in the Government’s debt or in taxation.

He expressed disappointment at the President’s speech at the opening of Parliament, and at that of the Finance Minister on Budget Day, for not detailing how the Government would strengthen the economy.

It was evident that by 2015 the Government would increase its national debt by €600 million, not reduce it, creating an annual deficit during this legislature. On the other hand, the preceding government had aimed for financial balance.

Concluding, Mr Fenech said the Government’s apparent readiness to postpone dropping the national debt five per cent annually would amount to irresponsibility.