The deficit would be "more than projected but much less than expected", Finance Minister John Dalli said yesterday. He predicted that the country's financial situation should be stabilised in about three years' time.
Speaking at a meeting at Sta Lucija just a day before presenting his budget estimates today, the minister said a country's financial situation reflected what was happening in that country. If an economy was not doing well, revenue from taxation would be less than forecast, as had been the case last year.
The government had also expected Lm14 million from the financial protocol it had signed with Italy this year, but the protocol had not yet been ratified by Italy and the money would only be received next year.
Mr Dalli said the government had spent more than planned on pensions and other social services but it had also started to cut expenditure and put on hold programmes which were not a priority.
One of the government's primary objectives was to retain a balance among all sectors of society according to the principles of solidarity, said Mr Dalli.
A total of 60 per cent of Malta's Lm800 million budget was given back to the people in social services and other benefits. The government had to ensure that this money was received by the people who really needed it.
The financial situation was also dealt with by Prime Minister Eddie Fenech Adami, who noted that the EU would be giving assistance to Malta.
One sector in which change was needed, he said, was tax collection. The systems aimed at curbing evasion were not being used as intended and as a result the government was not collecting as much as expected. Those administering the VAT department should analyse the figures they were being given as there was still too much evasion taking place.
The prime minister held that the country was moving from words to action. Parliament had just approved a bill aimed at assisting the shipyards, although the Labour opposition had criticised the bill as a first step towards closing the 'yards down. Even the General Workers' Union, he said, had confirmed that the shipyards were being given a chance to survive.
Economists were saying that the country was going through a difficult period. It was true that Malta could have done better, but it had just passed through more than five years of disagreement between the two major parties on EU policy. In spite of the uncertainty this had created, Malta had not done badly, Dr Fenech Adami argued.
Everyone had now realised that there had to be change in the national interest so that the country would be able to meet current and future challenges.
The government was not imposing measures but discussing and reaching agreement on what was needed to be done.
He said that actuarial studies on pensions were expected to be ready in January and it had been agreed with the social partners that a decision on pensions would be taken by June.
The Maltese, he said, had more than Lm2 billion in the banks and Maltese families made every effort to lead a better lifestyle. If political parties pulled the same rope, the country would be far better off.