As if by conspiracy, time and events have provided an abundance of distractions for Maltese public opinion during the last couple of years.

The electoral upheaval leading to Malta’s accession to the European Union, was followed by three more elections – two for local government office and one for the European Parliament.

Malta then found itself overwhelmed in the emotional turbulence that gripped the world at the death of Pope John Paul. And it is going to take some more time to gain our composure, as we learn to navigate by the star of the new Pope.

While all of this was unfolding, the Maltese ship of state was making heavy weather. The officers and crew now have to come round to assess the sea-worthiness of their craft. First impressions are likely to be far from reassuring.

A European Commission report, prepared in terms of Article 104(3) of the Treaty and published last May, drew attention to the fact that, after the year 2000, the Maltese economy entered a period of slow growth. A negative outcome in the trade balance and poor results in the tourist sector led to a widening of the external deficit by l.3 percentage points to 3.4 per cent of GDP in 2003. But the immediate outlook for the economy was for a gradual upswing in the growth rate to l.4 per cent in 2004, accelerating to two per cent in 2005

Sinister development

It begins to look that these Eurostat and EU Commission Spring forecasts, published last year, were over optimistic. The International Trade Statistics Unit of the Malta National Statistics Office disclosed that, although export volume during last year (2004) was up, the value of export receipts declined

It had to be columnist Lino Spiteri who highlighted this sinister development, thereby breaking the deafening silence observed by the Finance Ministry and the Central Bank.

This development unfolded against a broader, gloomier scenario which involved the application of the excessive deficit procedure (EPD) for Malta, in terms of the Stability and Growth Pact.

Article 104 (3) of the Treaty stipulates that “if a member state does not fulfil the requirements (under the criteria laid down by the Treaty), the Commission shall prepare a report. The report of the Commission shall also take into account whether the government deficit exceeds government investment expenditure and take into account all other relevant factors, including the medium-term economic and budgetary position of the member state.”

In the course of its analysis, the EU Commission noted how Malta’s debt bill shot up from 56.2 per cent of GDP in l999 to 6l.7 per cent in 2002 and to 72 per cent of GDP in 2003, thus rising far above the 60 per cent benchmark laid down by the Maastricht Treaty.

EU Commission ruling

The Commission noted that, although budgetary developments had been adversely affected by weakness in economic activity, the general government deficit increase to 9.7 per cent of GDP in 2003 “did not result, in the sense of the Stability and Growth Pact, from an unusual event outside the control of the Maltese authorities, nor is it the result of a severe economic downturn”.

This is the diplomatic way of saying that the Maltese authorities did not exercise proper budgetary control.

At the time the EU report was published a year ago, it was anticipated that the government was to give flesh to its strong commitment to combat tax evasion, to undertake a structured review of expenditure, and to start a structured reform of the pension system and the healthcare service.

All of these continue to be balls in the air, suggestive of a “strong” commitment in the “immediate future” by an over-stretched, poorly-manned, government, suffering from fatigue and distracted from focusing on its true course.

Uncontrolled inebriation

Is it for lack of experience or is it a case of uncontrolled EU inebriation that Government ministers preoccupy themselves with, and give priority to, joining the euro, and to the endorsement of the EU Constitutional Treaty, instead of sorting out public finances and cleaning the national economic stable?

The Malta Independent on Sunday of 13 February, quite rightly, deplored the increasing government tendency to find “all the excuses for not being decisive”. It reflected public sentiment when it pointed out that “the country has been promised a perceptible improvement in the quality of life, but everything is still work in progress, whether it is the new hospital, the new roads, the improvement of the educational system, right down to improving the gas distribution system, to the foibles of the Enemalta system, and the interminable wait to have applications approved by Mepa”.

Things have reached a stage where something has to give unless there is decisive movement.

The storm is not less menacing because a blind government does not see the dark clouds gathering.

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