Finance Minister Edward Scicluna complained once more when speaking before a parliamentary committee today that in the government talks aimed at persuading the European Commission not to put Malta under an excessive deficit procedure, Malta was 'not being believed'.
He blamed the previous government for the situation, while former finance minister Tonio Fenech blamed the current government.
Prof Scicluna told the economic affairs committee that the European Commission did not consider the holding of a general election as an excuse for temporary slippage in deficit targets.
The government, he said, was insisting that the deficit's slight increase over the 3% threshold was temporary and a plan was in hand to slip back below 3% by year's end.
Mr Fenech said the real concern was that the Commission was actually projecting deficit growth of 3.7% this year, with next year being 3.6% in a no policy change scenario.
On the basis of the minister's comments it looked like Malta would be placed under the excessive deficit procedure. So what would be done about it?
Prof Scicluna said the previous government had given the impression that the Budget was agreed with the European Commission. Yet in a phone call with Commissioner Oli Ren yesterday, it transpired that this was not completely the case.
The Budget, he said, had targeted a deficit of 1.7%. But in the intervening period until actual budget approval, the government went into spending commitments which included collective agreements, the agreement on University funding and the spending on the pharmacy of your choice scheme. At the same time, revenue projections were found to have been overly optimistic. The result was a one percent increase in the deficit.
The European Commission was not accepting the argument that it had agreement on the budget. Indeed, its officials were complaining about figures 'being banded about' and that they did not know where they stood.
"The fiscal slippage on the deficit and the debt means we are not being believed."
Among the reasons for this, he said, was the fact that the former government had not kept its promise to reduce spending by €40 million and to freeze recruitment. Spending continued to rise.
"Whatever we promise is not being believed," Prof Scicluna said in a frustrated tone.
Mr Fenech said the ministry official would attest to how the budget was discussed with the commission, but the commission's officials never actually signed off on any budget because it was the country's budget.
He did not know what the commissioner had told the minister on the phone, but the EU in the past always praised Malta's economic performance.
The Commission would believe the government if it presented a clear programme how it would reduce the deficit and debt, but it had not done so. One was not seeing government determination to go in this direction. In the budget the government had actually given the impression that it was pushing back deficit targets.
Prof Scicluna could not blame the former government. The deficit performance in the first three months was better than last year's. And the present government was responsible for the remaining nine months of the year. Furthermore, the commitments Prof Scicluna had mentioned had only cost €10m, according to the minister in a previous speech.
Unless the government provided a remedy Malta would not only go into an excessive deficit procedure, but it would not emerge quickly, Mr Fenech warned.