This has been a predictable Budget and, really, one would not expect anything different, what with the pre-Budget documents and the statements, however generic and vague they may be, accompanying meetings of the Malta Council for Economic and Social Development.

There were no surprises and no shocking measures. What some quarters might term as surprising is likely to be the two percentage point increase in VAT on hotel accommodation. But the rest is meant, as both Prime Minister Lawrence Gonzi and Finance Minister Tonio Fenech put it, to consolidate what has been achieved over this past year and safeguard the country’s competitiveness without putting any unnecessary significant burdens on the people.

The Budget sets five main objectives:

The consolidation of public finances and a decrease in the deficit to below three per cent to assure economic stability and protect jobs.

Sustain economic growth by strengthening the competitiveness of both the country and enterprises.

Continue investing in the country’s infrastructure and the environment.

Further investment in the education and skills of children, youth and workers.

Notwithstanding the efforts made to strengthen the country’s finances, more in the social sector to improve the position of those most in need.

In a nutshell, the operative words of this Budget are consolidation and competitiveness.

The need for the country to strengthen what it managed to achieve over the past months as EU states struggled hard with a devastating economic crisis and some were even forced to launch austerity measures was stressed by Dr Gonzi soon after the Budget speech. Malta was not immune, he rightly warned, and challenges remained. Thus, one had to be cautious and pull at the same rope, the Prime Minister said.

Mr Fenech stresses the aspect of competitiveness in a Talking Point appearing on the back page today. “For us, competitiveness ultimately lies within our ability on how we manage the totality of our resources and competences to increase the prosperity of the Maltese. That is our responsibility and our commitment. That is what motivates our economical policy and it is in this spirit I invite you to view the government’s economic and fiscal plan for the forthcoming year,” he wrote.

The government has been wise and prudent in the way it behaved throughout the crisis. It had to act to address impending problems, notably in the form of enterprises that risked going under. It succeeded.

It also faced the music when it went ahead with its programme to stop subsidising lame ducks and to make all realise everything has a price.

This Budget indicates the government intends to remain on the same track. But there are still tough decisions that need to be taken and the sooner they are the better, even because, as the election looms closer, a political party is less likely to want to rock the boat.

For a start, the government must be careful not to overemphasise the feel good factor. True, Malta has done quite well but we must remain vigilant and never over-confident. Singing our own praises too much risks raising expectations and even illogical demands.

The sustainability of the healthcare and pension systems needs to be thoroughly examined with eyes wide open. International organisations, including the European Commission itself, have highlighted this issue on various occasions. One would have expected some sort of significant statement on this matter in the Budget speech. But, perhaps, the government plans to do so on some other occasion.