17 November 2004

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Budget discussions down to the wire

By Kurt Sansone

It won’t be a weekend retreat in Gozo for the social partners and the minister of finance this year in preparation for the Budget. Instead, they will be holding a one-day briefing next Saturday, during which Parliamentary Secretary Tonio Fenech will give the social partners a run-down of the proposals to be announced in the budget today week.
The Saturday meeting is preceded by a three-hour briefing being held this morning, during which Investments Minister Austin Gatt will outline Government’s proposal for an electricity surcharge linked to higher oil prices.
Gatt’s presentation comes at a time when the price of oil is on a downturn. At less than USD47 a barrel, the price of crude oil is almost at the same levels as those experienced in August when it was estimated that Enemalta would be losing an additional Lm4 million. At the time the Investments Minister said Enemalta would be able to absorb such a loss.
Even so, international oil price instability persists and another price hike is not excluded in the months to come, which is probably why Government wants to link the domestic price of electricity to international market fluctuations.
But clouds are amassing on the horizon as Government’s two-meeting approach one week before the budget does not seem to have gone down too well with the unions and constituted bodies.
While Government insists the discussions at MCESD level during the summer months provided a clear framework for the budget proposals, unions are insisting that the discussions at MCESD covered a host of problems and no decisions were taken on the best way forward.
The war of words that erupted between the General Workers’ Union and Prime Minister Lawrence Gonzi over the past few days is symptomatic of the discord that exists between Government and some of the MCESD members.
General consensus exists that the way forward to restore competitiveness and stimulate the economy would be through a negotiated social pact agreed to by all social partners. In the absence of an agreement, Gonzi has, however, signalled his intention to move ahead by taking the necessary decisions which will be announced in the forthcoming budget.

Saturday’s meeting will try and bridge the gap that exists between differing positions within the MCESD as well as the direction Government wants to take.
The public mood is conditioned to expect a ‘hard’ budget and the rumblings about a hike in electricity rates have conjured up images of the ill-fated 1998 budget when the then-Labour government hiked up utility rates amid wide ranging public protestations.
Budget 2005 will be Gonzi’s first as Prime Minister and Minister of Finance and is expected to outline a longer-term plan to reign in public expenditure and set the country on track to comply with Euro convergence criteria.
The budget will be presented on Wednesday 24 November and will be followed with the Leader of the Opposition’s address on Wednesday 1 December. The Prime Minister will wrap things up on Friday 3 December, when he is expected to deliver his reply to Sant’s speech. Discussions on the various estimates will be concluded by 15 December.


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