If the Finance Minister were to accept all the Budget proposals made over the past few weeks by the trade unions, political parties and other organisations, the government would find itself in deep financial waters not for a year or two but for an unforeseeable time. It would also earn the wrath of the upcoming generation, which would justifiably dub the Administration as financially mad.

The Nationalist Administration does make mistakes, as it has done a number of times since its re-election in 2008, but, fortunately for the country, it is not financially mad and all level-headed people would expect it to steer a realistic course in the 2010 Budget. If this is the yardstick any sensible government is expected to take in normal times, it is even more important for the Finance Minister to go by the same yardstick now when the country is still in recession following the slowdown that followed a credit crunch that has done so much harm to economies in countries all over the world.

Expectations have therefore to be well tempered with reasonableness based on the means available at the government's disposal. The worst may now be over and, as it has just been forecast by the European Commission, Malta can now look ahead to a "fragile recovery", but, surely, this does not mean that it can close one eye to fiscal prudence. Yes, the country is expecting the government to keep up its programme to stimulate the economy but it should not be politically irresponsible and splash out like there is no tomorrow.

In a span of only a few days, proposals have been made for the government to cut income tax, VAT rates, energy and water rates; to raise the minimum wage, pensions and allowance to students; to freeze government tariffs and levies; to extend the maternity leave; to revise unemployment benefits, the eco tax and the 12 per cent tax on property sales; and to lift the accommodation tax levied on hotels.

The hard facts are that the gross domestic product this year is expected to be down by 2.2 per cent. Unemployment is up to seven per cent and the government is expected to end the year with a deficit of 4.5 per cent.

The national debt is up; inflation is still running high and, as expected in a recession, government revenue is down.

Very tellingly, according to the European Commission, productivity gains are set to remain weak and unit labour cost growth in Malta over the forecast horizon is projected to be above the euro-area average. In light of these facts and figures, the challenge is how to avoid taking steps that could erode competitiveness and, at the same time, improve the standard of living. Warnings about possibilities of jeopardising competitiveness made by the EU Commission in its autumn forecast ought not to be taken lightly.

The forecast for next year is of a small economic growth, of just 0.7 per cent, but, at 7.4 per cent, unemployment is expected to run at an even higher level than it is this year and the budget deficit will only be marginally lower than this year's.

So, while the worst may be over, the country is not out of the woods yet and the best course for the Finance Minister to take would be one that continues to stimulate the economy without resorting to any excesses that could, in the long term, make the situation worse than it is today.