Just over six months from now, Malta will have a new currency – the euro – and the whole of Malta should be proud of the work that went into meeting the convergence criteria that allowed us to make this next step towards eurozone integration, said Prime Minister Lawrence Gonzi yesterday.
Speaking in a live televised press conference held at Castille, Dr Gonzi said: “Malta has passed an exam that it had to study long and hard for. We have met the European Commission’s criteria,” he said.
Dr Gonzi said that he knew three years ago, when Malta first began pushing to get ERMII status, that it was an ambitious plan. “We had a 10 per cent deficit and we needed to get that to below three per cent. We managed and the whole country has a lot to be proud of. We had to make sacrifices, true, but we were sure that they would bear fruit,” said Dr Gonzi.
He said that in those three years, the economy grew substantially and there had been huge, record amounts of local and foreign investment. “That means more jobs for the people of Malta. It just goes to show that our plan to consolidate public finances was a responsible one,” he said.
A beaming Dr Gonzi said: “The European Commission examined everything down to the last scrap of data and we were told that our report and our work was credible and sustainable. In fact, European Commissioner for the Economy and Monetary affairs Joaquin Almunia praised us.”
He said that the certificates were there for all to see, even the sceptics who thought Malta would not make it. “Our policies are sustainable; it means that we can continue to attract investment. People only invest if there is a stable and sustainable environment around them,” said Dr Gonzi.
The Prime Minister hit the nail on the head when he said that the general public does not want shiny new coins, but more investment and, in turn, job creation that the new currency will bring with it.
However, Dr Gonzi urged caution. “We should not be euphoric and go overboard. People should just keep their cool and wait for the official changeover date. Until January next year, the euro will still be regarded as a foreign currency and charges will be made accordingly,” he said.
He said that euro adoption was a national project and everyone, including sceptics contributed because they hardened the government’s resolve to succeed in meeting the convergence criteria. “The country should now unite to face all the challenges that are thrown our way,” said the Prime Minister. He also reserved a word for the National Euro Changeover Committee Chairman Joseph FX Zahra, quoting Commissioner Almunia’s own praise in that “Malta did very, very well.”
Parliamentary secretary Tonio Fenech reminded those present that the report was not carried out by Malta, but by the European Commission at the Maltese government and the Central Bank’s request. “We did that because we felt we were ready and the results have shown that we were ready. There were five major criteria to be met and we satisfied all of them,” said Mr Fenech.
Mr Fenech said that legal procedures against Malta initiated by the EC for excessive deficit should now also be dropped. He said that apart from the five major criteria of public debt, inflation, deficit, long-term interest rate stability and stability of the exchange rate, other criteria were taken into account. These included the fact that Maltese law was compatible with European legislation, the fact that record investment had been recorded and that Malta’s economy was well integrated with Europe’s.
Malta Central Bank Governor Michael C. Bonello reiterated concerns that the public should not begin to change to euro now. “Until next year, the lira is legal tender and any form of exchange will carry penalties until that date. As from 1 January 2008, all forms of local currency will be converted into euros free of charge,” he said.
Reacting to questions from the floor, Dr Gonzi admitted that there was still more to do and that there were challenges ahead. “As for healthcare, which was mentioned in the convergence report, the government’s position is unchanged. We want to continue to offer free healthcare which is one of the best in the world to the general public,” he said. However, he added that while Malta had excellent centralised healthcare, more was needed in the community care sector and the government was committed to intensify its efforts in that area next.
He also said that if Malta carries on with this rate of economic activity, we will be sustainable. Asked about pressure to increase wages and salaries, Dr Gonzi said: “The government has already negotiated a six-year collective agreement with the public sector, while the private sector is an issue which needed to be thrashed out between unions and employers.”
Answering another question, Dr Gonzi said the adoption of the euro as currency would automatically make Malta more competitive because businesses will no longer have to pay fees related to exchange mechanisms. Dr Gonzi also said that Malta’s feat was all the more applaudable due to the fact that the country was hit hard by skyrocketing oil prices. “And I will also say that it hit our country harder than most, because I do not know of any other country that burns oil for power to turn sea water into potable water,” he said.
Asked by The Malta Independent on doubts raised by the European Parliament member Alexander Radwan as to the accuracy of Malta’s fiscal data, Dr Gonzi replied: “Well, I think that the European Commission’s report and Commissioner Almunia’s comments speak for themselves.”