The Malta Employers’ Association (MEA) praised various budget measures taken to address various economic sectors, however they warned that “the main question is whether the thrust of these measures is sufficient to pull the economy out of the recession,” MEA Director-General Joe Farrugia said.
Government had been “cautious” to introduce an innovative and wide ranging set of measures whilst keeping control of the fiscal deficit. “One questions whether a stronger stimulus package, even at the cost of a higher fiscal deficit for 2010, would have been a more effective strategy to steer the economy towards positive real GDP growth, especially given that the deficit is lower than the average for EU economies that are also facing a recession,” Farrugia asked.
Government, the MEA said, had “been unable to provide a more powerful economic stimulus because of insufficient funds. “This is mostly due to the fact that Government’s commitments to finance an overburdened public sector and welfare system have left it with no room to maneuver,” the MEA Director-General charged.This situation had left “the economy vulnerable” and might delay economic recovery. However, the budget “does contain provisions to reduce recurrent expenditure,” Farrugia explained.
The MEA warned that while control of inflation should be a priority, “the Price Watch Unit should focus exclusively on price monitoring” and not be used to “persecute legitimate traders, it must in no way hinder fair competition,” the MEA Director-General insisted. It could also be used to investigate movements in prices of items in the basket of goods and services that make up the RPI, such as vegetables and fish. The €2.5 fund allocated to help enterprises in difficulty might be “insufficient” to deal with the demands of companies who were still facing the brunt of the recession during 2010. The MEA also slammed the granting of the subsidy granted by Government to partially alleviate the proposed new utility tariffs.
“Considering that the funds allocated to subsidise household utility rates amount to €10m leads to the conclusion that government has succumbed to political pressures at the expense of economic priorities,” the MEA Director-General warned.
It reiterated its position that COLA would be “a factor that can threaten jobs, and that can also lead to further inflationary pressures in 2010”.
Finally, the MEA also called on the Government to announce immediately the revisions in utility tariffs to consumers “to remove uncertainties during the upcoming Christmas season”
