As officials from the European Central Bank held an emergency telephone conference on how to fend off financial collapse in neighbouring Italy and calm the markets, Prime Minister Lawrence Gonzi said his government was prepared to do what it takes to contain the outside risks to Malta’s economy. This is what he told The Times:

“Economic and financial fundamentals do not seem to justify the current instability in the financial markets.  However, the current turmoil is not just about fundamentals but also about the markets’ confidence in the capacity and ability of governments to address in a determined and credible manner the economic and financial problems at hand.

“The decisions of the Heads of State and governments of the euro area member states, on July 21, are meant to address these problems in a determined and sustainable manner. These decisions are now being implemented by the euro area member states.

“My government has been and is continuously following the dynamics of this crisis and its impact on the financial markets and the real economy to ensure that our national interest is safeguarded.  It is difficult to ring-fence the impact of this crisis to the countries that are currently in the midst of this turmoil.  If it continues over a sustained period of time, the wider European economy is bound to get hit negatively.  Indeed, there are strong indications that this is already happening.

“Our open economy is inter-linked to and is dependent on the economic fortunes and the financial stability of the outside world and, in particular, the European economy. Therefore, I would like to once again reiterate, for the umpteenth time, that we are not immune to any of the turmoil that goes on outside our shores and that we need to be continuously vigilant in order to avoid getting hit adversely by this turmoil.

“While we have been and are taking the hard and, very often, painful decisions to do what is right for our country, others and, foremost of which, the Opposition, have continuously either overlooked or else feigned ignorance of the ongoing economic and financial problems elsewhere and, unjustly, tried to take political advantage of any real or perceived adverse impacts of our structural reforms. Such posturing knows no bounds or limits. Nonetheless and, unfortunately, our prudent and proactive stance is being vindicated by the current events.

“In view of this, we have to continue with our fiscal consolidation strategy and with required structural reforms to ensure our continued credibility and the market’s continued confidence in our economic and financial strategy.

We are also resolved to do what it takes to contain any outside risks to our economic and financial stability.

“Indeed, we shall not refrain from taking the right and timely decisions in the interest of our people, rather than in the interest of any short-term political gain. In the final analysis, the success of our economic and financial strategy to date is being translated into a stable macro-economic environment, increased economic growth and new jobs for our people. These are the ultimate indicators of success of such strategies.  However, within the context of the current turmoil, the challenge is to maintain that.”