Finance Minister Tonio Fenech said this afternoon that although the government recognised that the current international economic recession would cause problems for Malta, the island was not in a crisis situation and one had to be careful not to alarm the people unduly.

Speaking at the end of a meeting of the Malta Council for Economic and Social Development (MCESD) which was presided by the Prime Minister, Mr Fenech said the government would be flexible, and as the situation evolved it would be prepared to take measures and if necessary inject funds into particular sectors burdened by the crisis.

The minister said the government would conduct a sectoral analysis - and if needs be a factory by factory analysis - of the impact of the current situation. However, the sectors most likely to be impacted were tourism and elements of manufacturing industry, particularly those factories which supply the auto industry and heavy industry.

It was significant, the minister said, that factories impacted by the crisis had so far gone on a four day week, rather than dismiss workers. This showed they were projecting early recovery. Some were saying recovery could come as early as the third quarter of this year, while others were seeing improvement early next year.

Mr Fenech said the government would try to keep within the 3% deficit threshold but he could not be dogmatic on this. Keeping within the deficit limits was important particularly from a credit rating point of view.

He said that the utility rates was among the subjects raised during the meeting. The government stuck to its position of revising the tariffs after six months - in March - and the prospects were that prices would drop.

Gejtu Vella, General Secretary of the UHM, said the social partners needed to work together in such difficult times.

Vince Farrugia, Director-General of the GRTU, insisted that utility prices needed to come down immediately. He however welcomed the government's commitment to flexibility as the economic situation unfolded.

During the meeting, the Prime Minister and Finance Ministry officials gave a briefing on the current economic situation and the outlook for the year.

Earlier today the Malta Employers' Association published a list of measures which it proposed to the government to ease the impact of the international recession on Malta.

Also today, the GWU called for meetings with Dr Gonzi and the management of ST Microelectronics on the future of the plant in Malta. ST is the biggest private sector employer in Malta. The mother company said today it intends to slash some 4,500 workers from the group worldwide. (see separate stories).