I have rarely witnessed such uncertain times in financial markets, especially in currency markets. The battering of the euro as a result of the Greek liquidity and solvency crisis was not easy to predict up to a year ago. Today, the Greek crisis and the economic instability that is has created is affecting the growth prospects of a number of countries in the eurozone.

The strengthening of the US dollar and sterling in the last few months was not on the radar screen of many financial analysts. The US economy continues to be hampered by massive budget and trade deficits. The political uncertainty preceding the UK general election was pointing to further weakening of sterling that at one stage, in the latter part of last year, was very near hitting parity with the euro.

As a country that is so heavily dependant on foreign trade in goods and services, we need to learn how to live with these significant fluctuations in the value of the euro and other currencies that indirectly impact on our competitiveness. When we joined the euro club we gave up any discretion we had to manage our exchange rate. But we are not alone in facing this dilemma.

In the past Italy often resorted to the devaluation of the lira to overcome its declining competitiveness. It has now learned to use other tools to survive in a globalised economy that rewards efficiency and punishes mediocrity.

The decline of the euro can in some ways bring benefits to some of our industries. Up to some months ago, our operators in the tourism sector feared a collapse in our British market because of the seemingly unstoppable decline of sterling against the euro. The Greek crisis put an end to all this and sterling's current hardening should augur well for bookings from the UK. But is this development as good as it seems?

A quick scan of the UK travel media seems to indicate a surge in interest by British tour operators to promote holidays in Spain and Greece since, not surprisingly, these countries that are facing massive economic problems are slashing prices to attract more visitors. With unemployment is Spain now exceeding 20 per cent and with the salaries of Greek workers being cut in some cases by 30 per cent, there is no room for complacency. The tourism industry in these countries is quickly restructuring itself to become attractive to potential foreign visitors.

Our tourism operators will do well to understand the implications of these developments in eurozone countries that are our competitors. What worries me is that on this issue, as in many others, we seem to lack the sense of urgency that is needed to bring about the change that can instil new life in our tourism industry. It will be ironic if we start to loose business to Spain and Greece simply because, unlike them, we do not have our backs against the wall.

The strengthening of the dollar, the weakening of sterling and the hardening of oil prices is another development that can bring downside risks to our growth prospects. Oil is now hovering around the US$ 85 per barrel and most analysts are predicting that in the medium term oil prices will continue to rise as the global economy slowly moves out of recession. The last thing we need is another surge in tariffs for water and electricity as a result of higher crude oil prices.

Since currency exchange management and monetary policy are definitely out of our control, we need to focus more on fiscal management and the promotion of business friendly policies to ensure that we survive the financial markets turmoil that is unlikely to go away any time soon.

It is worrying that the local political debate is still not focused enough on the issues of fiscal rationalisation which will aim at cutting public expenditure, lowering taxation and ensuring that our social services system is viable. Were it not for independent regulators, like the IMF and the European Commission, most of us would hardly believe that we are facing significant long-term threats to our economic prosperity unless radical reforms are taken to make our public finance viable.

It may sound very inspiring to state that we need to move people away from social benefits to viable employment. But when this statement in not accompanied by a tangible plan on how this is going to be achieved, one will need to fear about our and our children's future.

jcassarwhite@yahoo.com