I refer to The Times report about last Wednesday's parliamentary debate on the Bill concerning Malta's participation in the European Financial Stability Facility (July 16). For the sake of clarity and precision, I would like to make the following points regarding my inputs to the debate:

The Times reported that "Sant said after having loaned €30 million to Greece, the House was being asked to accept that proportionate to its size, Malta would pay up to €400 million over three years. This meant the government would be borrowing €34 million which was more than 10 per cent of the present debt".

What I said was that with the €30 million loan to Greece and the obligation to guarantee and loan up to €400 million being assumed by Malta under the new Financial Facility, the country was entering overnight into loans and financial obligations of up to €430 million, which is more than 10 per cent of the current national debt. Given the state of public finance, any loans extended under the Greek arrangement and the Financial Facility must be funded by new loans contracted by the Maltese state. Such an enormous additional load was being taken up almost on the nod, given Malta was in the eurozone. When Malta's currency was the lira, this had never happened.

The report quoted me as saying that "The euro project was a political one to lead to a federal Europe but it turned out that this was a currency which was not pegged to federal ties. The problem of the euro was the lack of economic coordination."

"My" argument here was as follows: the euro project is a political one, meant to bring member states of the EU closer together. The euro was designed as a single currency in the absence of central political authorities which could, on a federal basis, implement centralised or strongly coordinated economic policies.

Yet the implementation of such policies, implying the existence of federated political structures, would contradict the positions of many EU member states which do not want federalism.

The report quotes me as saying there is a Council of Europe commitment to have national statistics offices independent of the government of the day. Actually I referred to the decision taken this June by the European Council, which is the highest executive body of the EU, insisting on the full independence of national statistics agencies.

The Times report refers to what I said about investment commitments, competitiveness in the EU and the growth outcomes of the Maltese economy. Possibly because I did not make my point sufficiently clearly, the argument as reported needs to be clarified.

In a nutshell, this is what I said: national debt and Budget deficit targets under the Stability Pact reflect the anti-inflationary concerns of 30/20 years ago and concentrate too hard on public finance.

Other targets being set remain non-operational or ineffective, like in the Lisbon strategy and even now in the 2020 "Vision". A most important parameter which comes under the direct control of government, public investment, is never given quantitative targeting. Deficits get slashed by cutting investment while keeping recurrent expenditures on the up and increasing taxes, as has happened in Malta where public investment as a percentage of annual public spending dropped from 10.5 per cent in 2004 to five per cent in 2009.

Investment both public and private has a direct impact on competitiveness in the medium run. And the big problem of the eurozone is the growing divergence in competitiveness between its member states. Budget rules which are imposing austerity will exacerbate this problem and up to now there have been no effective proposals to address the issue.

Finally, regarding current Maltese economic performance, tagged at 3.4 per cent by the NSO for the first quarter of 2010, The Times reports I said "this would not have been achieved were it not for the nine per cent that came from the gaming industry and the five per cent from financial services".

What I said was that the headline rate of growth masks the fact that while the real economy has ongoing problems, overall performance is being boosted by the gains made in remote gaming which according to the IMF accounts now for nine per cent of GDP and financial services at five per cent of GDP. The Minister of Finance has stated in Parliament he disagrees with the IMF estimate regarding the size of remote gaming in Malta but to date I have seen no alternative figure.