The challenges facing our economy have been defined often enough both by local economic analysts and by international institutions that regularly take a dispassionate view on how our economy is performing in its quest for convergence with the wealthier eurozone states. The 2012 Budget is based on subdued ambitions that generally fail to address in earnest these issues even if it is not short of tactical initiatives that one can hardly fault.

We may not be in the dramatic conditions of the weaker eurozone states... but we certainly must not be complacent...

The speech by the Minister of Finance has once again failed to “strengthen the credibility of the medium-term consolidation strategy, define the required broad measures, embed fiscal targets in a binding rule-based multi-annual fiscal framework and improve the monitoring of budgetary execution”, as strongly advised by the European Commission in June 2011.

At the same time, little has been said about the government’s strategy to reduce the national debt and the servicing costs that it entails. We may not be in the dramatic conditions of the weaker eurozone states that have lost the trust of the financial markets but we certainly must not be complacent on these important issues.

Similarly, nothing much was said on how the government intends to tackle the age-related issues that face our society now and, much more dramatically, in the coming two decades.

The next stage of pensions’ reforms remains opaque while nothing at all has been said on how our health system is to be financed in a viable way in the long-term. Malta is one of the eurozone countries with the most serious aging problems.

With an ever increasing incidence of age-related diseases like dementia and other chronic conditions, I would have expected some details on an active aging strategy to address our aging society issues rather than stand-alone tactical measures aimed at assisting older people.

An active aging strategy needs to be far more extensive and comprehensive than a range of initiatives aimed at easing the financial pressures on those suffering from the effects of aging, however welcome such initiatives may be.

The way the government plans to improve our competitiveness that ultimately determines whether we are seen as being attractive as an investment destination was given little attention in the Budget. The European Commission in its competitiveness report has advised the government that it needs to “improve the overall qualifications of its workforce”. Earlier they had recommended to the government to “take measures to reduce early school leaving by identifying, analysing and measuring its causes by 2012 and by setting up a regular monitoring and reporting mechanism on the success rate of the measures”.

If we do not take these measures, we risk flying blind in the management of our educational system despite the substantial amounts of money we are spending to build new schools and buy equipment for our students.

The 2012 Budget is rich in initiatives targeted at practically all sectors of the economy – initiatives that one can hardly disagree with.

For instance, the fiscal support given to mothers with young families in the form of tax rebates, especially for those opting to send their children to private schools, are just one example of the welcome bells and whistles that adorn this Budget. But in the context where Malta’s ultimate objective is to converge with the richer eurozone member states in the criteria of economic prosperity, the long list of tactical initiatives mentioned in this Budget is hardly a good substitute to the solid substance that we need to realise our ambitions.

So, it will not be surprising at all that the European Commission and other international institutions will continue to insist that we need to be more ambitious in our plans to modernise our economy.