EDITORIAL | A slow-down is inevitable, but what is needed now is qualitative investment

Even though Economic indicators show that the government’s finances are still be in surplus, with revenue from the Individual Investor Programme deducted from the equation, Malta’s unprecedented economic growth is forecast to slow down in the coming years as the government embarks on a prudent approach.

“We would be happy to retain the 6% growth per year, but we are forecasting 5.7% growth,” Scicluna said, adding this was one way of remaining prudent and ensuring the country lived within its means.

This was stated by Edward Scicluna who said Malta was not prepared for the sudden high level of growth of the past few years and the country’s infrastructure was beginning to feel the pressure of the unprecedented expansion.

Scicluna, who was speaking at the Labour Party’s Annual General Conference a week ago and  said the government was preparing to send its financial forecast to the European Commission.

“Many sectors weren’t ready for this type of economic expansion and it has presented the government with new responsibilities,” he admitted.

Despite this, he said Malta was following a model of sustainable growth and that he was still wholeheartedly backing the economic route the government had chosen.

In 2018, the Maltese economy experienced a 7.1% growth rate, which Scicluna described as having happened occurred far too quickly.
“We grew consistently from 2013 onwards and have now seen that last year ended with the third surplus in a row. By 2020, however, we are forecasting slower growth,” he said.

He said income elasticity was a tangible issue facing the country today. “As the economy keeps doing well, people start expecting the best out of the health and educational institutions on the island,” he said, adding that inflation was at a record low at present.

The finance minister insisted that investments would remain the government’s priority, since this would prepare Malta for possible inflation in the future. “We want to keep investing the money that the government is generating. We don’t want to create expenses from which we never get our money back.”

Rebutting the claims that the number of poor people in Malta was increasing, Scicluna said he knew of no nation or country that didn’t have its own cases related to the issue of poverty.

“You should judge the government on how it minimised poverty. In fact, people at risk of poverty went down to 19.3%.

“Since such a lot was said on Individual Investors Program and its contribution to economic growth, it’s important to point out that revenue generated from the passport scheme has been cut by half, so that the net growth of the IIP is just 0.5% of our surplus,” Scicluna added.

He said the general government debt as a percentage of the GDP had gone down to 46% and that this was important for future generations.

“Every measure that the government has put into place aimed to hit four targets: that poverty is reduced by creating employment, that low incomes are addressed, that low pensions are dealt with, and that vulnerable persons are helped.”

This was done via tax refunds, free school transport, affordable housing benefits, an increase in the minimum wage, free childcare services, enhancing service pensions, and tax exemption on pensions among other measures.

With this admission it was only too clear that the growth in the economy should be based on qualitative growth. One that earmarks the new economy, business to business opportunities and efficiency and upgrading Malta’s infrastructure and environment. 

Furthemore building on new education and research programmes that look to the future as the economy changes focus and direction.
This is the future.