The debate on the budget due to be presented in Parliament should really be characterised by a debate on the performance of the Maltese economy and the performance of the public sector in delivering the results expected of it in return for the financial resources placed at its disposal at last year's budget.
However, this is not to be because of the increase in the international price of fuel, how Enemalta Corporation can make good for the massive exposure it has had this current year on the price of fuel and the consequential decision to increase the price of petrol and the surcharge on the consumption of water and electricity.
This can be perfectly understood as this exposure has to be covered by us and no one else. And an exposure of something like Lm125 per head of population (including children and senior citizens) is not easy to cover. In fact, the increases that were announced last Tuesday shall only cover the exposure on the price of fuel partially as there is still a shortfall of Lm30 million or so.
Moreover, the size of the problem is such that it must have diverted the attention of the Prime Minister and his Cabinet away from other issues that need to be addressed at this year's budget.
Thus, just as last year the budget debate was reduced to a debate on four public holidays falling on a weekend, this year we are running the risk that all we shall be talking about in the coming months are the electricity bills and the price of petrol and diesel. The country had experienced something akin to this eight years ago.
This is something that we can ill afford, given the transformation that is taking place in our economy and society in general and given the changes that need to continue taking place in our economy in the light of the upcoming adoption of the euro as our currency and the continued need to rein in the fiscal deficit to sustainable levels.
What counts is not the price of petrol but whether we can afford it. And whether we can afford the price of petrol is an economic issue because it has to do with our ability to grow the economy and therefore personal incomes.
It is folly to point out that in the budget government needs to take the proverbial bull by its horns and take tough decisions. The government has been taking tough decisions for several years now; decisions that have proved to be beneficial to the Maltese economy. Examples include trade liberalisation (it was meant to kill off the manufacturing sector), privatisation of state assets (it was meant to bring about large scale redundancies), the giving of stipends to students (it was meant to create a cadre of intellectual unemployed), the development of financial services (it was meant to attract a great deal of dirty money), developments in information technology (it was meant to create mass unemployment).
None of these doomsday prophecies have realised themselves and today we all wonder how we could ever have doubted the net beneficial effect of such decisions. This is why, when thinking of the budget, the real focus must be the state of the economy and the change it is going through.
It is important to appreciate the change we are going through because it is becoming fairly evident now that there are some segments of the economy that are performing well and others that are not. The net effect has been an increase in the gross domestic product and a decrease in unemployment over the last year.
In the run-up to the budget I would like to mention two aspects, which may be considered to be more notes on the margin, rather than core issues. The first issue is the decision by the government to postpone (presumably to next year) its next issue of bonds. Why this decision has been taken is not clear. However, it may seem that the government could be hitting its targets in terms of reining in the fiscal deficit.
This could be attributed either to expenditure cuts or to increases in revenue or both. It may also be the case that the government is hoping to make good for its cash-flow deficit through the sale of shares in Malta International Airport plc and Middle Sea Insurance plc.
What is equally striking is that the amount of Treasury bills that the government has on issue has also gone down in recent weeks. Is this a sign that the economy is performing well?
The second aspect provides a more definite pointer. It has to do with the high level of profits being earned by banks. Given the increased scrutiny that the banks are adopting on the loans they are giving out and the care which is taken in investments, these profits are a very strong indication of the success of the banks' own clients; and hence a very strong indication of a good economic performance.
Next week we shall have a set of economic data at our disposal to analyse. They will tell us how the economy has performed over the last 12 months. They will also tell us about the changes taking place in the economy. Budget time is also about these aspects apart from personal rates of income tax and other such issues.