A growing economy is a positive sign but this is not being reflected in better wages, according to the Labour Party finance spokesman Karmenu Vella.

Chiding the government for persistently failing its fiscal targets, Mr Vella said persistently high inflation was a source of concern because most of it was caused by government-induced costs and market imperfections such as lack of competition, cartels and dominant companies.

Mr Vella, in a statement issued on Monday, said public finances had been on a downward trend since 2004, long before the international recession hit hard in 2008 and 2009.

He said Prime Minister Lawrence Gonzi’s promise in 2004 to turn the deficit into a €60 million surplus by 2010 went off mark and, today, the country had a deficit of €711 million. Similarly, Mr Vella said, public debt increased by €863 million instead of dropping as the government had promised.

“Government debt to GDP ratio increased to 68 per cent in 2010 from 62 per cent in 2007. However, when the government-guaranteed debt is included, the ratio goes up to 84 per cent,” Mr Vella said, adding this showed debt was rising at a higher rate than economic growth.

Malta’s fiscal problems were compounded by the euro crisis. While saying that Labour agreed with maintaining European economic stability to sustain a strong euro, Mr Vella called on the government to come clean on the level of exposure Malta had committed itself in the eurozone stability fund.

“There are questions the government has not yet answered and this is unfair on taxpayers,” he said.

Mr Vella asked whether the government was satisfied with the monitoring of measures imposed on countries that had been bailed out and whether Malta had set a limit in terms of how big it would allow the crises to grow when guaranteeing its share of the bailout fund.

In its reply, the government said the opposition was being “irresponsible” when it raised doubts about the country’s financial situation.

It said the opposition’s lack of a clear fiscal policy or strategy was evident in its criticism, especially that levelled at it for sacrificing the country’s deficit at the peak of the economic crisis to save jobs, attract more investment and save companies from winding up.

It said the country’s financial situation was sound and this was why it did not need to take austerity measures like other European countries.

Regarding the monies borrowed by Greece from Malta, the government said this was lent to Athens with interest so the Maltese taxpayer was not shouldering any burden. It said the assistance was needed to ensure stability in the eurozone, which would otherwise have severe repercussions on Malta.