Parliament on Wednesday continued to discuss a bill for the implementation of budget measures, which includes a clause authorising the government to raise a loan not exceeding Lm100 million.

Speaking in parliament on Wednesday, Parliamentary Secretary within the Finance Ministry, Tonio Fenech explained the government’s intention to create a more balanced economy within the next four to five years and the loan is aimed at investing in a number of areas in order to further enhance economic growth.

Labour deputy leader for parliamentary, financial and economic affairs, Charles Mangion questioned the sustainability of the government’s income and its control over the national deficit since this year it will have to borrow Lm100 million, although the national deficit is expected to amount to half that sum.

Dr Mangion said this is ironic, especially when one considers that the burden of taxes on citizens has increased substantially over the past four years, as has in fact been confirmed by Eurostat.

He said the government has previously not had to raise loans as a result of one-off occasions by means of which it sold public assets, but generation of such income is not projected for this year.

During the last budget, the government had said the tax burden decreased, but Eurostat data shows otherwise, said Dr Mangion. He said the government’s income from taxes amounted to 44 per cent as a percentage of the GDP, when this was just 28 per cent in 1998-99 and projections show that the tax burden is expected to increase further this year and the next.

Dr Mangion added that the burden of interests is also increasing, despite the fact that the government sold a number of public assets, placing a heavier burden on tax-payers and the country as a whole. Replying to Dr Mangion’s comments however, Mr Fenech stressed the government’s intention for latitude growth of the economy.

“While there are no prospects for the country to generate income from public assets this year, the aim is to invest in various areas, thus generating growth so that the country may not only free itself of its debts, but generate a surplus so that we will be covered during difficult periods,” stated Mr Fenech. He said this is also the principle upon which the eurozone is based and there will be periods when the country will have to borrow money in order to invest in its assets and possibly privatise once a certain economic strength would have been achieved.

Dr Mangion said he agrees with Mr Fenech’s statement that the government’s aim is to possibly generate a surplus since it is positive that money is borrowed to generate capital expenditure, but it is unacceptable that certain projects run into millions of liri over and above the projected expenditure.

Although Mr Fenech insisted that an increase in the projected expenditure is often enough justified as a result of changes to original plans, Dr Mangion said this is the case for an interminable number of projects and the over-runs are often a result of a lack of proper planning.

“On the other hand, I totally agree with raising loans to enter public-private partnerships and to provide services intended to improve the quality of life of citizens,” said Dr Mangion, insisting that his point is the very fact that the heavy tax burdens imposed on citizens are not proving to have a ripple effect on economic growth.

The discussion on the bill for the implementation of budget measures according to the 2007 financial estimates will proceed on Monday.