Finance Minister Edward Scicluna is upbeat on the economy. Photo: Matthew MirabelliFinance Minister Edward Scicluna yesterday told Parliament that the government had closed with a deficit of around €225 million in 2013: €120 million less than the previous year.
Introducing the Trust and Trustees Bill, Prof. Scicluna rebutted attacks on the government’s handling of the economy made by Opposition MPs Kristy Debono and Marthese Portelli during the debate in the second reading on the Bill to approve the Budget estimates.
Mr Scicluna said it was not true that the government had lost control of its income and expenditure. On the contrary, it was controlling its expenses and was on track.
There was nothing to be alarmed about and there was a big probability the government would manage to keep its deficit under three per cent.
The minister said that one should not consider a quarter in isolation but a “moving average”, because a given three-month period could be better or worse than other quarters.
Prof. Scicluna argued that to manage its debt and liquidity, the Treasury had to borrow money. Recently, certain stocks matured and therefore the issue of fresh stocks was required.
Neither was it true that the government’s debt would go up by €500 million.
Debt rose when one spent more than one earned, as had happened in the past 25 years under PN administrations.
While the Opposition argued that the country was faring worse under a Labour government, the minister said that in the big picture, the economy had made a turnaround since the last general election.
Salaries and business profits, two main variables of the GDP, were both looking very positive and were being strengthened with each quarter. Retail, which represented consumption, has now increased again by 1.4 per cent after a slight dip.
The expenditure by the government continued to raise the GDP, and as long as this was under control it was still positive.
Turning to exports, Prof Scicluna said it would be wise to leave ST Microelectronics and oil bunkering out of the picture in order to see what was really happening.
The rest of Malta’s exports and manufacture, such as food and chemicals, had increased by €27 million compared with the same period last year. There had been a 2.5 per cent increase in exports, which accounted for 80 per cent of those working in manufacturing.
It was true that ST’s exports had gone down, but its imports had also declined, he said, adding that this was the way to analyse and discuss these figures.
“We have no problem taking action when we see any risks,” he said, adding that the competitiveness of the country would always be a priority.
The biggest success has been a surplus in the service industry, most notably in tourism which had seen a 10-12 per cent increase in the balance of payments.
An increase in the number of bed nights meant jobs had been created in this sector.
While other countries had had tragic outcomes in the property market, Malta had not seen the negative repercussions that had caused such a financial crisis in the international banking sector.
However, he conceded, it was true Malta had a glut of vacant properties and construction had come to a halt.
Talking of what he said was another leading indicator, there had been a turnaround in the importation of machinery.
When it came to private investment such as mortgages, there had been a steady decline from December 2011 to April 2013, from seven to 4.7 per cent. However, the slide had stopped and household loans had stabilised at five per cent for the period April-December 2013, according to the Central Bank.
In the first six months of 2013 there was a definite positive turnaround especially in equity capital and other foreign investment.
The same trend could be seen in manufacturing, with direct investment being very encouraging and a clear signal that investors were showing faith in investing in Malta.
The important thing was that employment opportunities were on the increase.
He said that in the past ETC figures clearly showed that each year a number of people retired to be replaced by a school leavers and graduates, so the participation rate remained static. However, now an additional 5,000 posts had been created with a 3.8 per cent increase in the female workforce alone.
The number registering for work had increased because there were more people looking for work who would normally not even have registered with the ETC.
One had to see this as part of a trend, not in isolation. The labour force stood at 200,000, which was positive.
The Opposition’s insistence on creating a climate of fear when it came to jobs was out of place, Mr Scicluna said.