This has become, media-wise, the country of the bland. To see the TVM news on any day is to be fed spoonful after spoonful of positive stories or, at the most, innocuous, mildly-interesting fare. So too the mainstream media, which is not usually thought of as being owned or in any way controlled by the government.
The reality, as we all know and see it, is far from this idyllic picture. The media is letting the government get away with all kinds of spin and doctoring of news.
The worst happens when the media simply reports what the government and its key persons say without checking to see whether things are as they are made out to be.
To cut this introduction short, I have taken three episodes that happened this past week and show, in the space afforded, how often a balanced appraisal of the Maltese economy by the EU or by Fitch – and even by our own Central Bank – is turned and twisted by government propaganda into a paean in praise of Malta and its rulers.
The risk is that people are too hurried – or too lazy – to double-check what the government is saying against the original.
On Thursday, the European Commission issued its Industry Competitiveness Report and Minister Chris Cardona was very prompt to jump on what he thought was its bandwagon. This is the minister, who a few days back, when Malta slipped SIX places in the World Economic Forum’s Competitiveness Index, had the gall to come out with a statement that Malta was ‘still in the top 50’ countries.
An article published a day later read: “Today the European Commission published its Industry Competitiveness Report for 2014. In his initial reaction to the report, Minister for the Economy, Investment and Small Business, Dr Chris Cardona, noted with satisfaction that the European Commission is acknowledging that Malta is on the right track to improve its industrial competitiveness. Dr Cardona shared the optimism shown by the European Commission with regards to the positive effects that measures introduced by government to boost business in Malta are leaving on the sector.”
Oh really? Here, just for starters, is what the report states, inter alia: “To remain a leading industrial exporter in the world, and to grow and create jobs, the EU and its Member States need to be innovative, create value out of knowledge, and use natural resources in a sustainable fashion. Looking at how well the Member States are doing, and whether they are improving or not, four groups emerge:
· Member States with high and improving competitiveness: the Netherlands, Germany, Denmark and Ireland.
· Member States with high but stagnating or declining competitiveness: Belgium, the United Kingdom, Austria, France, Italy, Luxembourg, Sweden and Finland.
· Member States with modest but improving competitiveness: Estonia, Lithuania, Spain, Latvia, Czech Republic, Hungary, Poland, Portugal, Romania, Slovakia and Greece.
· Member States with modest and stagnating or declining competitiveness: Slovenia, Bulgaria, Croatia, Malta and Cyprus.”
At least the minister was fair enough to provide us with the link to the full Commission document, so I am adding it; so that people can see all that the Commission had to say about Member States and especially about Malta. http://ec.europa.eu/DocsRoom/documents/6739/attachments/1/translations/en/renditions/native
Actually, the link I got the document from has a different URL address, so I am posting it too. http://europa.eu/rapid/press-release_MEMO-14-526_en.htm
Then there came Friday evening and Fitch, the rating agency, issued its statement in which it confirmed Malta’s ‘A’ rating and praised the government for bringing public finances back in order.
That it did and Minister Edward Scicluna lost no time in issuing a statement in which the government took all the credit.
But once again, Fitch said a lot of other things, which somehow do not find space in the minister’s statement.
Fitch said: “Malta brought its general government deficit (GGD) under control during 2013. Following significant fiscal slippage in 2012, GGD declined to 2.8 per cent of GDP, below Fitch's projection at the time of the latest rating review (3 per cent of GDP). Deficit reduction in 2013 reflected strong increases in income tax and indirect tax receipts. Fitch expects a deficit of 2.5 per cent of GDP in 2014 and 2015, closer to the rating median (2.1 per cent).
Stronger revenues contrast with rising expenditure, reflecting significant underlying pressures which Fitch has highlighted in previous rating reviews. Fiscal figures on a cash basis for January-July indicate expenditure slippages, particularly in the areas of healthcare, social security and transport. Fitch does not expect these developments to compromise deficit reduction in 2014 as in 2H14 revenues should receive a boost from payments of excise and duty taxes by Enemalta, the public energy utility, to the government (around 0.6 per cent of GDP).
However, continued slippages in public expenditure could pose a risk to public debt reduction should revenues underperform in the future. In this respect, the adoption of the Fiscal Responsibility Act could help anchor fiscal policy and particularly growth in public expenditure.
Enemalta poses the main risk to 2015 fiscal outturns. Fitch notes the authorities' decision to reduce energy tariffs for commercial users from March 2015, while simultaneously cutting production costs at Enemalta. However, the latter is subject to execution risk. Importantly, it assumes that the interconnector with Sicily will be completed by end-2014. Moreover the plan could negatively impact Enemalta's profitability, should cost savings fail to materialise. This in turn would have an impact on the budget and be rating negative.
Contingent liabilities pose additional risks to creditworthiness. Government-guaranteed liabilities stood at 15 per cent of GDP in 1Q14, the majority of them related to Enemalta. Furthermore, consolidated government payment arrears were around nine per cent of GDP in 2013, the second-highest level within the eurozone, albeit down from a peak of 10.2 per cent in 2012”
And these are the key assumptions backing the Fitch review: “Fitch assumes that the deal between Enemalta and Shanghai Electric Power Company will be finalised before the end of this year. Shanghai Electric Power Company has agreed to acquire a 33 per cent stake in Enemalta. This deal reportedly has the potential to enhance the utility's profitability over the medium term and reduce its debt. A successful restructuring of the company would likely reduce risks around the crystallisation of contingent liabilities. The agreement should be presented to the Maltese parliament before the end of September 2014.
Fitch assumes that implementation of ESA 2010 accounting changes will result in limited revisions in GGGD. Fitch will base its forecast on the new methodology once it is introduced across all countries in the EU.
Fitch assumes that in case of need, the government of Malta would only be predisposed towards supporting core domestic banks (210 per cent of GDP in 2013), which are systemically important, in particular Bank of Valletta (106 per cent of GDP). For HSBC Bank Malta (74 per cent of GDP), Fitch believes that any necessary support would come from its parent company. In Fitch's view, the Maltese government would be very unlikely to support the international banks (413 per cent of GDP) and would probably not support non-core banks (74 per cent of GDP) either.
Fitch assumes the eurozone will avoid long-lasting deflation, such as that experienced by Japan from the 1990s. Fitch also assumes the gradual progress in deepening fiscal and financial integration at the eurozone level will continue; key macroeconomic imbalances within the currency union will be slowly unwound; and eurozone governments will tighten fiscal policy over the medium term. It also assumes that the risk of fragmentation of the eurozone remains low.”
In this case, the minister did not provide the link with his press release, so I am taking the liberty of adding it: https://www.fitchratings.com/creditdesk/press_releases/detail.cfm?pr_id=871534&origin=home
The third example comes from the Central Bank of Malta’s quarterly review and its business and consumer surveys. Other papers follow other markers from the QR, but over the past years I have always followed these surveys in bad times and in good ones.
One would have thought that with unemployment falling and so much hype everywhere, people would be happy and satisfied. Not on your Nelly: here is what the survey starts by saying: “Survey data for the second quarter of 2014 show a deterioration in confidence among firms operating in the services sector. In contrast, confidence was less negative in the construction sector. Sentiment remained practically unchanged in the manufacturing sector and among consumers. Largely reflecting developments in the services sector, the economic sentiment indicator (ESI) fell marginally to 108.9 in June from 110.8 in March but remained above its long-term average of 100.4.”
Here again is the link: http://www.centralbankmalta.org/updates/downloads/pdfs/qr_2014_2.pdf
Finally, on Friday Eurostat issued its July 2014 figures for industrial production which states, inter alia, “The highest increases in industrial production were registered in Ireland (+11.3 per cent), Estonia (+2.8 per cent), Slovenia (+2.3 per cent) and Croatia (+2.1 per cent), and the largest decreases in Denmark (-4.7 per cent), Malta (-4.2 per cent) and Greece (-1.7 per cent).”
But of course you wouldn’t have heard or read that, would you?
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