This week saw the publication of a Concluding Statement on Malta's Economy by the International Monetary Fund (IMF). This covers the  performance of the past year and reveals that real GDP growth was high in the first three quarters of 2018 - a growth that resulted in ever-present labour shortages that were filled by sizeable inflows of foreigners. GDP growth averaged 6.5 per cent in 2018, slightly lower than the previous year, and a lower 5 per cent is expected in 2019.

All this is driven by buoyant domestic demand, a bonanza that has given birth to a feel-good factor which is commendable. This is evidenced by the excellent sales turnover registered by shops over the Black Friday week - pattern that continued over the Christmas period.

The IMF report mentions a number of steps to help ensure sustained growth in the future and  among their recommendations, one finds the classic call urging government to help start-ups.

Start-ups are finding that access to credit is hindered by red-tape and the perennial demand by banks for tangible collateral. Equally important is the need to set up an innovation hub of international repute. Attracting foreign talent and having more PhDs graduating annually can be the right building-blocks to populate a vibrant ecosystem.

Critics lament the fact that the government is more than happy to attract mega manufacturing projects, lured by state agencies which, in turn, guarantee their bank loans and build custom-made factories which they rent out at low rates. This is not to forget the injustice occurring when permits are issued to mega developers erecting high-rise luxury apartments on public land. The Opposition is criticising the government, when it sees public land worth millions granted at fire-sale prices.

This is not a level playing field where SMEs are concerned - they are not the government's darlings.  Regardless of this incongruence, it is an undisputed fact that this accelerated growth in GDP has fuelled an unprecedented exuberance and voters are enjoying the ride. Investors are in a race to fuel their egos by building concrete and glass units in the Eldorado area of Paceville. This building frenzy has come under heavy attack from environmentalists, Caritas and Church authorities, who lament the fact that confidence in Dubai-ification can only be described as a symptom of wanton greed.

In other countries, it has led to the ruin of traditional core values and way of life. Sceptics say that we are in a time warp, painting a fairy-tale picture about a fleeting feel-good factor, but that deep down, the foundations are weak. This heavy concentration of building and land speculation can be a temporary phenomenon and one cannot avoid mentioning similar property bubbles that swept over Ireland, Spain and Portugal. When they burst, they inflicted dire consequences on banks, leaving in their wake unpaid suppliers and high unemployment. Naturally, when a property boom leads to a burst, politicians rush cap-in-hand to the IMF.

To protect against this potential problem, the IMF team suggests prudence in bank lending and a reduction in the number of non-performing loans. Again, it recommends an extra effort to support start-ups and create a culture in which small can also be beautiful. Needless to say, we have been advised ad nauseam to increase links between academia and the private sector which, at present, can be pictured as two trains running in parallel. It is a dichotomy that Malta is spending big on education yet still faces a high proportion of early school-leavers. This is criticised in the 2018 edition of the European Commission's Education and Training Monitor. Regrettably, the amount spent on innovation is a mere 0.6 per cent of GPD (mostly on salaries) which is the lowest in Europe. (Finland reaches three per cent) .

Notwithstanding, the island prides itself on the fact that, for many years, it has subsidised education from kindergarten to tertiary levels. It is the only country in Europe that pays a monthly stipend to students and grants them free public transport. Yet the EU report found that "the performance of Maltese students in international assessments remains poor". Passes in foreign languages, mathematics and science subjects are below the EU average.

In the next scene, we see the entry of  the Phantom of the Malta Development bank (MDB). This institution has been resurrected and one hopes that the much-hyped funding for higher education and research it promises will materialise. Enriching our limited resource of trained workers could attract more foreign direct investment - starting with the UK in the shadow of the Brexit negotiations.

Another topic in the IMF report that attracts attention is the need for more social housing, for which there is a waiting list of 3,500 families. This human malady is partly linked to the influence of gentrification, where house price inflation is rampant. It is no surprise that low-income workers cannot afford the rents on offer. For deserving families, the IMF recommends more rent subsidies by the State and the acceleration of investment by the Housing Authority.

Moving on to a positive note, we must congratulate the government for creating financial stability, jobs for everyone and a general feel-good factor. The attraction of new foreign direct investment (FDI) is commendable and has resulted in more entities that need to be supervised. Again, the deluge of new rules concerning BEPS, AMT and anti-terrorist financing (not ignoring the scoop by an assassinated blogger of Panama Papers revealing companies held by top cabinet members - judiciously registered by NexiaBT).

All this, including the closure of Pilatus, a disgraced Iranian bank introduced by KPMG, has placed unprecedented strain on the MFSA. Last year saw the sudden closure of three private banks, one of which is currently freezing bona fide depositor funds. The IMF report suggests, inter alia, that the government must improve the effectiveness of supervisory functions at the MFSA and its crisis management frameworks, to ensure a smooth long-term financial and operational independence - shielded from political strings.

But, again, not everything is gloom and doom, since rating agencies praise Finance Minister Edward Scicluna for his success in navigating the ship of the state in choppy waters amid the uncertainty of a faltering Eurozone, immigration challenges and the deleterious effect in case of a no-deal Brexit.

In conclusion, the administration is rapidly approaching its mid-term blues and to add to the excitement, the Prime Minister declared that he is to pass on the baton and will not seek re-election. Perhaps now is a good time for him to reflect on past achievements. The irony of the mid-term blues may correlate with his yearning for early deliverance.

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George Mangion is a senior partner of an audit and consultancy firm, and has over 25 years experience in accounting, taxation, financial and consultancy services. His efforts have seen that PKF  has been instrumental in establishing many companies in Malta and have placed PKF in the forefront as professional financial service providers on the Island