Even though Malta, like so many other countries, is feeling the impact of the steadily rising prices of crude and cereals, the government is forecasting a healthy economic growth rate for this year. Finance Minister Tonio Fenech said the other day that the country was not helpless in the face of today's international economic realities and that the first quarter this year had also been positive. However, the island can hardly afford any degree of relaxation in its efforts to tackle the new challenges facing the economy today.

In truth, the Nationalists in government have come a long way since they stumbled badly in their feet when, according to the former Nationalist Prime Minister, "money was no problem". The party had found it doubly hard when it came to get its act together in preparation for the island's membership of the EU and, even more importantly, for membership of the eurozone.

But, to its credit, the government did manage to reform the government's finances, to an extent that Malta not only qualified for eurozone membership but is now looking forward to balance the budget within two years. The cherry on the cake is the smooth transition to the euro.

Malta joined the eurozone together with Cyprus on January 1. A European Economic Advisory Group report on the European economy says both economies are growing faster than the rest of the euro area, "which might induce rising inflation". At the time the group drew up its report, it expressed uncertainty as to the two islands' future ability to keep to the road they had taken. The report said then that "given the upcoming elections in both countries, it is not clear whether the fiscal consolidation path (taken) during the run-up to the euro will be maintained".

Well, the group need fear no longer for after its re-election the government remains committed to seeing that it would not veer off course from the path it had taken before joining the eurozone.

Of course, things may well happen that could push the government towards derailment or make its life difficult but, despite several difficulties, the indications suggest, at least so far, that the government is doing well in its work to meet its budgetary targets.

According to Mr Fenech, Malta is expected to have a growth rate of three per cent this year, compared to 3.8 per cent last year. Last month, both the Central Bank and the EU forecast growth for this year at 2.6 per cent. Even so, the economy is expected to grow at a faster pace than the euro area average. In a bid to raise growth, the government promised before the election to cut the tax rate again as from the next financial year.

The government has already been doing this gradually over the years and, according to the minister, the policy worked. However, in view of the worsening situation over the price of crude oil and food, many are now wondering to what extent the government would be able to keep to its pre-election promise. Progress can easily be interrupted, or go into a hiccup mode, if the efforts to check new difficulties, including rising inflation, are not kept up.