Prime Minister Lawrence Gonzi yesterday broke his silence and spoke about what Malta believes is the way forward within Europe to ensure that no cooking of books takes place again.
Speaking at a business breakfast yesterday, Dr Gonzi said Malta expects the European Commission to “better monitor state finances” as this would prevent a repetition of the collapse of a eurozone economy, as happened in Greece.
Dr Gonzi was speaking the day after the European Commission announced a new proposal to give it more powers to sift through finance statistics and in turn give its feedback on where it believes individual states are performing well and where they are not.
Dr Gonzi said this would be beneficial for all, but what he has really done is gone out and stated Malta’s case. In past leading articles, this newspaper has stated that Malta should stand up and state its case – we are one of the few nations in Europe which does not have an explosive deficit or unmanageable national debt. We are over the three per cent of GDP Maastricht benchmark for sustainable growth, but not by much. Our debt is manageable, provided that the economy grows. The last point is perhaps the most worrisome as growth is still sluggish and is expected to remain so for some time.
It seems that the PM has bided time. While the big players in Europe negotiated the deals which allowed for the Greek bailout loan and the IMF/EU fund to act as a safety net and boost market confidence, the Malta Government remained quiet.
We believe that Malta should have made its position clear and public, from the start. We have fulfilled our obligations and are now in the process of taking out loans which will then be loaned on to Greece at commercial rates. It seems as if the government waited for an official announcement by the European Commission before stating its position. We, of course, fully agree with what the PM has said – our books are clean and we want others to be the same. If they are not, and if the rot continues to spread, it is our currency which is at risk. Like Germany, it took a lot for us to give up the Lira, just as they gave up the Mark. It was strong, it was backed by a basket of currencies and it was backed by gold. We joined the euro for a good number of reasons – because the rules for doing so were clear – you had to remain within sustainable growth benchmarks in order to keep the euro strong.
Let us not forget that we had been making sacrifices and getting ourselves in line since 1998. We slashed our deficit by almost 10 per cent by the time we joined the EU. We did not manage that by cooking our books and allowing borrowing to take on a life of its own. We managed by prudence, frugality, restructuring, reform and cutting out waste. In other words, we were (and still are) financially sound. Make no mistake, the challenges are there and we have hurdles to overcome, but we should have made more of an emphasis on the fact that we have been, and still are, a low-risk, responsible and liquid nation. The issues surrounding the euro are going to get worse before they get better. We would do well to lobby with those who want rigorous monitoring by the European Commission.