The Finance Minister's reply to my press statement regarding the collapse of investment in Malta, according to figures published by NSO, is a confirmation that confusion reigns supreme at the Finance Ministry. The Finance Minister did and could not deny the unpleasant fact that investment in Malta retreated to 1994 levels.

Quite paradoxically the minister, in his Budget speech for 2009, planned record-high investment expenditure for this year! Indeed, last November, the Gonzi administration trumpeted an increase in investment of e75 million but instead capital expenditure was a meagre e6.5 million.

In its statement, the ministry claims that since the presentation of the Budget for 2009 circumstances had changed and that it was not possible to foresee such a dramatic downturn during 2009. This is not true. The international economic downturn had turned into a full-blown crisis since the collapse of Lehman Brothers on 12 September 2008, whereas the Budget was presented in November – almost two months later! This is nothing more than an admission of incompetence by the ministry in failing to anticipate then – unlike the PL and other serious economic observers – that a global crisis, which was already well under way during the presentation of the budget, would have a significant negative impact on the Maltese economy and public finances.

Indeed, the ministry kept on harping on how resilient our economy is in the face of the economic crisis and even went as far as to predict that the economy would grow by 2.5 per cent. Instead it has contracted by 2.6 per cent.

It is surprising and confusing for the Finance Ministry to accuse the PL that it is only interested in figures, when the pre-budget document presented a few weeks ago consisted only of a compendium of data published by NSO and Eurostat, with policy proposals nowhere to be seen! Economic journalists observed that it was so mind-boggling with figures that it was not worth taking out for a read at the beach. The minister's counter-statement is a confirmation that, unlike the PL’s, his economic analysis is based simply on wishful thinking that his government is delivering. Unfortunately, the latest economic statistics show otherwise.

The confusion that reigns in the Finance Ministry could not be greater than when, in its reply to the PL's statement, the ministry boasted of increasing support to the tourism sector, but incredibly forgot that a week earlier, in an interview with another newspaper, the Finance Minister categorically singled out tourism as a prime target for support cuts in the coming budget! The crisis that gripped tourism is clearly still with us, and incidentally, on the same day, Nationalist MP Robert Arrigo lashed out in public at the Tourism Authority for putting its priorities upside down, and clearly hinted at the need of further support to the tourism sector to prevent “a cold from turning into a bronchitis”!

Whether the Finance Minister likes it or not, the harsh realities that economic statistics are revealing cannot be escaped. These clearly show that the government has failed miserably in attracting investment. Surely there is no escaping the fact that the global crisis was bound to have a significant negative impact on investment and exports. However, one needs to ask why investment levels in Malta collapsed to 1994 levels, and exports plunged to levels last seen in 2000, whereas in the Euro area both investment and exports fell back only to 2005-2006 levels.

Over to you Minister.



Dr Gulia is the Opposition's Main Spokesman on the Economy and the Self-Employed