Finance Minister Tonio Fenech yesterday laid the ground for a tough budget characterised by cuts in spending.
"Now is not the time to raise taxes ... to be aggressive with the economy," he said. "But we have to be realistic and keep our feet on the ground."
He said during an interview on Radio 101 that everyone agreed the government needed to cut spending, but the same people would then complain when the cost cuts affected them.
"There will be requests for wage increases, pensions and social services. I would like to accommodate all of these but we have to be realistic," he said, before the first few meetings on the pre-budget document to be launched next week.
Now was not the time to pick the fruits from the tree but the time to plant seeds, he insisted.
His words come on the back of a deadline set by the European Commission for the government to rein in the budget deficit to below three per cent by 2010. Sandwiched between the fiscal deadline of the EU and the need to boost the economy in a time of crisis, the government's solution seems to be targeted spending cuts.
In this vein, Mr Fenech mentioned the removal of subsidies on water and electricity bills.
He said his government had been consistent in saying that lowering taxes would require cutting back on unnecessary subsidies such as those on water and electricity bills, suggesting that this would be the way forward as the government walks a tight rope.
"Nobody, not even at the MCESD (Malta Council for Economic and Social Development) ever suggested that we should pay for the subsidy on water and electricity through higher taxes," he said. "You just cannot have both, it's a reality which does not exist."
He also spoke about the Shipyards and revealed that two of the three bidders which last month had been told to improve their offers for the ship repair operations had filed new bids.
Late last month, the government told the only three consortia which made offers for the ship repair section that their offers were deemed to be minimal. Yesterday he said that even their investment plans were puny.
If they had now followed the guidelines given by the government, which were based on a professional estimate of what the ship repair operations should fetch, then the privatisation of this section could be back on track, he said.
The setback appeared to be quite a blow for the privatisation. Although the other three units up for sale - shipbuilding, the Manoel Island yard and the super yacht facility - are underway, the ship repair section has always been considered to be the trickiest part of the sale.