Frans Camilleri once again replies to my questions regarding the sustainability of Malta’s economic model.

With regard to construction, the increase in demand is very much influenced by immigrants who can pay relatively high rents (not to mention the poorer immigrants who huddle in garages and shared rooms). A slowdown in well-to-do immigrants, which could well happen if the rebate to foreign firms, including the e-gaming ones cease to exist, would leave many properties unoccupied. Besides, the rapid growth in construction has not been accompanied by appropriate planning, infrastructural upgrading and protection of residents’ quality of life.

As to the effect on the banking sector, may I remind the correspondent that, in its 2017 Article IV Consultation, the IMF makes several references to the risk that bank lending is, highly focused on mortgages and concentration of property-related loans.

Camilleri also quotes a KPMG 2017 study that states there is no construction bubble in Malta. Is this the same entity that acted as Pilatus Bank auditor?

On the sale of passports, he raises its temporary nature and says that “this is already being addressed by the development of new sectors such as those of cryptocurrencies and blockchain”. He may have a point but I think we have to wait and see before making such predictions.

Hence, the need to diversify Malta’s economy rather than putting all our eggs in too few baskets.