Prime Minister Lawrence Gonzi yesterday described Budget 2008 as “a prudent statement of confidence” based on credible and sustainable policies.

Addressing a press conference after presenting the forthcoming year’s budget speech in Parliament yesterday evening, Dr Gonzi said this fourth budget, that he presented as finance minister, focuses on economic growth and the means of creating incentives and rewards for people in employment.

At the same time, said the prime minister, the budget includes several measures in favour of families, ensuring a better quality of life in a secure and peaceful environment.

Dr Gonzi said that this year’s budget is considered to be the second step by means of which the country is reaping the benefits of financial and economic growth, but the government wanted to be prudent.

“We do not want to endanger what we have managed to achieve. Neither do we want to endanger our ambitious aims,” he said, insisting that the government will continue being credible and sustainable in the policies it implements.

He added that the reduction of the fiscal deficit was an essential aim for the country, and said the government was committed to do so by 2010.

Saying he was convinced that the country will achieve the ambitious aims laid out by the Nationalist government, he pointed out that there was no increase in taxes, but the country’s revenue increased.

Replying to questions put forward by journalists, Prime Minister Gonzi explained that the children’s allowance will be given to everyone, bearing in mind that families with many children are the ones who deserve most assistance.

“This policy is in favour of families with children, as every child will now be entitled to at least the minimum rate,” he said.

Parliamentary Secretary in the Finance Ministry Tonio Fenech, who addressed the press conference jointly with the prime minister, spoke about the mechanism by means of which the government established the compensation rate for the cost of living increase.

He said that due to extraordinary price increases, particularly those resulting from the international price of cereals, the government had to provide adequate compensation.

“Food prices are expected to increase further and according to a calculation based on a twelve month period, we established that the adequate compensation would be that of Lm1.50 / EUR3.49,” said Mr Fenech, adding that this should not hinder the country’s competitiveness.

Dr Gonzi said this measure was intended as a shock absorber for the country’s economy, and as a means of anticipating expenses that will need to be paid for, over the next year.

“We have a number of challenges to face, particularly those related to the ever rising international price of oil,” said Dr Gonzi.

Replying to a question by The Malta Independent regarding people’s expectations, particularly due to the fact that this was a pre-election budget, Dr Gonzi said running the country and planning for its future was not a game.

People’s lives are in the government’s hands, and it is for this very reason that we have to take responsible decisions, he said, adding that the government would have ruined the country’s achievements had it presented a budget that was simply aimed at making people happy.

Speaking about the issue related to public holidays falling on weekends – a measure introduced two years ago to give the economy a boost – the prime minister said the government’s decision formed part of a social pact.

The General Workers Union had not agreed, but the government had made it clear it would go ahead with its decision, said Dr Gonzi, insisting that he believed this decision formed part of the economic growth registered recently.