High government expenditure, significant public debt and lack of economic diversification were the greatest risks posed to the current positive growth being experienced by the Maltese economy, according to the International Monetary Fund and credit rating agency Moody’s, finance shadow minister Mario de Marco said.
He pointed out that these messages had also been raised by the Opposition in its Pre-Budget Document.
Dr de Marco said the Opposition welcomes the fact that both reports highlighted positive aspects such as the high rates of economic growth and job stability
But at the same time emphasis was made on issues related to government debt and expenditure.
“Moody’s notes that government debt remains high, compared to similarly-rated countries. On the other hand, the IMF claims that fast growth in current expenditure, highlighting particularly employment in the public sector, makes targeted debt reduction challenging.”
Moody’s also noted that a significant contributor to debt reduction over the past couple of years was no sustainable measure but rather the repayment of tax arrears related to Enemalta.
In this context, the Opposition reiterated the importance of delivering sustainable growth with the private sector as the principal vehicle towards growth, as opposed to increased government spending.
“It is also crucial at this juncture to identify new economic niches which will deliver growth in the coming years. Unfortunately, Government seems intent to solely rest on the laurels of the current growth, without no appetite to build a vision for the future. Fortunately, constituted bodies and opinion leaders have in the past few weeks taken on board the calls being made by the Opposition.”
Dr de Marco noted that even Labour-appointed Bank of Valletta chairman John Cassar White had joined such chorus in his regular contribution on the Times of Malta yesterday, defining “the lack of diversification in Malta’s economic activities is arguably one of the biggest threat to our future prosperity.”
“In the lack of government’s unwillingness to think about the country’s future, the Opposition will be presenting in the coming days an economic vision. A vision which looks on enhancing the success achieved so far, ensuring that such success benefits all members of the community,” Dr de Marco said.
The government has welcomed both Moody's and the IMF's assessments.