Labour’s spokesmen for the economy while sounding the alarm bells about the country’s finances following the downgrade of the credit rating agency  Standard & Poors, refused to commit themselves when asked if the current debt level has created a ‘gaping hole’ in the country’s finances.

During a news conference Labour MPs Karmenu Vella and Charles Mangion together with Prof Edward Scicluna who will be contesting the general election on the party ticket, gave their views about the implications of the Standard & Poors report. The news conference which started half an hour late, was supposed to focus on ‘economic growth to improve the standard of living’.

Mr Vella said that the credit rating agency has relegated Malta to ‘second division’, when downgrading the country to BBB. According to him even previous PN and Labour administrations including those headed by Mintoff and Karmenu Mifsud Bonnici, had better credentials to run the country.

The Labour MP explained that the timing of this announcement could not have been any better as it discredited the PN’s claim that the country’s finance are on solid ground. Mr Vella said that this is the result of five years of broken promises and government ignoring advice from the opposition.

The Labour MP remarked that this is the second downgrade from S&P, while criticising the finance minister for bringing up excuses instead of acknowledging the truth.

He said that the report warns about the country’s debt which is hindering what he described ‘the fiscal flexibility’. The Labour MP lashed out at the prime minister for not keeping his word to have a balanced budget by 2010. He said that the total government debt and guarantees have reached 95 percent of the gross domestic product (GDP). In addition 8.2 percent of revenue is going to service debt. The credit rating agency has warned that if this exceeds 10 percent it will have to lower the credit rating once again. The report, he said, also refers to the alarming level of debt which Enemalta has accumulated in recent years.

Labour MP Charles Mangion said that the report attributes the downgrade to local circumstances, rather than the situation abroad. He said that the prime minister and the finance minister are responsible for this mess. Dr Mangion said that all these factors are undermining the country’s competitiveness. He also laid emphasis on the need to increase female participation rate at work, and reiterated that the party will present its proposals to reach this goal

Labour MEP Edward Scicluna, who is being touted as the next finance minister remarked that this is not a downgrade for Malta but for the country’s economy. He cast his doubts about the government’s target to keep the annual deficit below 3 percent.

Prof Scicluna rubbished claims that the current level of debt is 60 percent of GDP, as the government is claiming, saying that the corresponding figure by S&P is 90 percent. 

He described the government’s claim that 20,000 new jobs have been created since 2008 is “a figment of the prime minister’s imagination”. Prof Scicluna said that in some aspects the employment participation rate in Malta is below that of Spain, where there is record unemployment in the EU.

Borrowing a phrase widely used by the last Labour administration headed by Alfred Sant which accused the PN of leaving a ‘gaping hole’ in the country’s finances, The Malta Independent online asked the Pl spokesmen if the current situation fits this bill. If in the affirmative we asked whether this would undermine Labour’s electoral programme. On the other hand if the country’s finance are in a healthy state, we asked the Labour spokesmen to point out the reasons for their criticism of the PN’s slogan, that it can guarantee a solid future.

However both Prof Scicluna and Dr Mangion repeatedly dodged the question which was rephrased four times saying that they do not wish to use such terminology. Prof Scicluna said that the country’s economic growth is well below its potential, while Dr Mangion referred once again to the alarming level of debt, remarking that one fourth was accumulated in the current legislature.