A Chinese proverb says that when strong winds are blowing, some hide behind walls and others build windmills. Even though Malta is a wind-swept island, the force of the wind expected to blow from continental Europe and elsewhere, in the form of a recession, is forecast to be stronger than usual but how is Malta going to react? It is only natural that each and every economic sector tries to do its best to protect its patch but when the Finance Minister presents the budget for 2009 today he would have to rise above sectoral interests and take a wider view of the island's economic situation with the aim of seeing how best to fend off the impact of the slowdown and, even more importantly, to see how we can keep on the right track in development.

With Malta's economy being so small and vulnerable to outside developments, keeping on the right track is no easy task at times like the present. Meeting the expectations of the different segments of the community makes the task even more difficult. The Finance Minister's job today is to balance these expectations with action that needs to be taken to face up to unfavourable economic circumstances. Rather than hiding behind walls and retrench, the government would need to give a strong lead for the country to build windmills, in other words, to move forward through action that could help exploit new opportunities for growth and, at the same time, taking measures to shore up, directly or indirectly, those meeting difficulties.

It is most unfortunate that the presentation of the budget this year is being so heavily overshadowed by the furore over the rise in the water and electricity rates. The timing is definitely wrong. The government is correct in wanting to do away with subsidies and it would certainly be wrong for any establishment to keep relying on subsidy for survival but, on the other hand, is it wise in raising the tariffs now when, according to the International Monetary Fund, the world economy is facing a major downturn with the United States and Europe either in, or on the brink of, recession and when the manufacturing sector in Europe is said to be at its lowest level in over 11 years? The social partners think it is not and last week they called for the postponement of the new tariffs until April but the government has ignored their pleading.

Time will tell who is right and wrong over this, and maybe, following the stand taken by the social partners in the Malta Council for Economic and Social Development, the government will, after all, come up with measures that will somehow offset the rise, or part of it. The most effective would be a cut in corporate and income taxes. And, naturally, wage and salary earners expect the usual allowance to make up for the rise in the cost of living. The latter would add new costs to employers but, however much they protest over this, as they have indeed done over the years, no government, Nationalist or Labour, is expected to commit political suicide and do away with the award of such an allowance as it has now become an established practice. Political parties are not that brave.

Expenditure-wise, the government has already admitted that it is off target but if, as expected, the country makes the right choice and goes for the building of the proverbial windmills rather than hiding behind walls, the government may need to put off to a later date its target to balance the budget by 2010.

It is all very well to protest and take to the streets in public manifestations against the rise in water and energy tariffs but more government borrowing means greater interest payments. Living beyond the country's means can land the island into more problems than it expects to face in the wake of an economic downturn.

A budget that presents a good balancing act will help meet expectations or, at least, some of them, without dampening the confidence in the country's ability to weather the coming storm. Defeatism will not help. When the going gets tough, the tough get going.