Whether the Opposition is in favour or not, the writing is on the wall. If everything goes according to plan, on 1 January 2008 our official currency will change from the Maltese lira to the euro.

For the man in the street, it will take some adjusting to. Though not difficult to operate, as a currency, the change from one currency to another will take time to sink in. According to the present fixing, at present the Maltese lira is equivalent to 2.33 euros and one euro is equivalent to 42c9m.

In view of this, it is imperative that double price marking is introduced as soon as possible. This will enable the authorities and the public at large to ensure that there will not be some kind of increase in price when the changeover takes effect. Given time, people can analyse numbers, check figures and verify that this changeover of currency is not in itself bringing about an increase in prices, leading to artificially caused inflation.

However, if double pricing comes in late, the general public will have much less time in which to adjust and a shorter period for consideration, and the possibility of some businessmen taking part in a price hike could be on the books.

The change to the euro is beneficial not only as a policy but also in addressing the cost of currency fluctuations when comparing different monetary systems. However it is imperative that people be well-versed and have a central point of reference to air grievances and get redress in order to put their mind at rest. Assuring the general public that there will not be a hike in prices, resulting in high inflationary consequences, is a must.

If we can give people a quick, practical redress in the event of abuse, then the changeover to the euro will be so much more positive.

Economy

We have a small economy, stable by our standards but very volatile when compared to those of larger countries. The economy of scales plays its part. However, we are

constantly aware that any variation or ripple effect, albeit not locally initiated, could rock the boat for us.

However, every small positive help towards the further stabilisation of economic operations is a big plus for us.

As soon as the euro is in, all those doing business with their EU counterparts will immediately experience greater stability. The risk factor on all sides, so far underwritten mostly by the importer, retailer and operator – who have had to make provision for the fluctuations in currency, will be appreciably reduced. This has been an ongoing concern, especially in the tourism industry and wherever business relations/ commitments are made on a long-term basis.

Look at the price of fuel today and the negative effect it is having on our economy at large. From 1 July onwards, Enemalta, or any other fuel importer, has to make provision for the cost of oil which seems to be spiralling upwards. To compound existing headaches, the rate of exchange of the US dollar could further increase prices if the dollar becomes stronger. Presently it stands at $2.97 to the Maltese lira. But there were days, not so long ago, when the rate of exchange between one lira and the US dollar was Lm1 to $2.3. Anyone dealing with China, Japan, the Asian sub-continent or the Americas will still have to measure his wares and make short-term commitments to avoid negative currency fluctuations. But for all business carried out with the euro-zone nations there will be absolutely no change. One could argue that one of our main trading partners, the UK, has retained its own currency but, looking objectively at what the future holds, I am sure that the UK will eventually have to fall in line with the larger majority of countries that have adopted the euro.

Devaluation

With the adoption of the euro, Malta will also have to be stricter and more careful with its fiscal policy and operations. The economy and the financial operation of its various sectors must be rigorously monitored and controlled. The government has to operate within defined parameters and our deficit at the end of the year has to stand at less than three per cent of GDP. Adhering to the Maastricht criteria and the subsequent evolution of European financial directives will become a way of life.

Gone are the days when one tried to restrain inflation or hide bad governance or the inability to meet targets by going for a re – or a de – valuation of one’s particular currency.

This issue has been discussed in Parliament over the past weeks. The country needs a firm political commitment from the Opposition that they are in favour of this line of action. It is about time that the Malta Labour Party Opposition woke up to the need for a brighter future in which business operators are not subjected to unnecessary uncertainties. Stream-lining will be the order of the day for a modern, forward-looking country within the euro-zone.

Tony Abela is Parliamentary Secretary in the Office of the Prime Minister