The government always denied that it was an electoral ploy, labelled as such by the opposition. But now that the price stability agreement with importers has come to an end, three weeks after the election, the MLP’s comments appear to have been quite justified.

The scheme was introduced late last year, just before Malta changed its official currency – from the lira to the euro.

The initiative was aimed at guaranteeing a smoother transition and to mitigate potential exploitative behaviour by locking the prices, for the first three months of 2008, to their 2007 levels. The only difference was that, instead of paying in liri, consumers started to pay the exact equivalent in euros.

The government, through the finance ministry’s Euro Observatory, had reached an agreement with a large group of importers so that prices would not change when Malta joined the eurozone.

At the time it was officially stated that the reason was, on the one hand, for consumers to become acquainted with the new currency as quickly as possible, and on the other to prevent importers from capitalising on the changeover to raise the prices of products and services.

The move had been considered by many, including the MLP, as a trick to keep the people quiet in the months leading up to the election. At the time the agreement was signed, there was no idea as to when the election would have been held, but it was always known that it would have been sometime in the first half of 2008.

That the price stability agreement was part of the election strategy was confirmed when there was talk of extending it from the end of March to the end of June. Again, this was at a time when the election date had not yet been announced. Considering that a switch-over from one currency to another practically always leads to inflation – whether that inflation is real or perceived is another matter – the government wanted to make sure that, until the election is held, the introduction of the euro did not become a bone of contention during the election campaign.

Its strategy worked, because the change of currency did not feature much in the five weeks leading up to the election. The MLP, normally at the forefront when it comes to matters of inflation and the cost of living, hardly mentioned the euro and did not make it an election issue.

This matter might have also contributed to the Nationalist Party’s election victory. Elsewhere in Europe there was a change of government in the first election after the euro’s introduction – and after joining the EU, for that matter – but this did not take place in Malta. With hindsight, the MLP should have focused more on this issue.

If the election had not been held in March, it can safely be said that ways and means would have been found to convince the importers to accept another three months of the scheme.

But, with the election now over, the price stability scheme has been officially closed. It is clear that now the government does not need it for political purposes, and with the importers adding pressure to eliminate the scheme it was not a surprise that the scheme came to an end – as originally planned – on 31 March.

It is, of course, government policy to have a liberalised market, with prices being controlled by market forces rather than through government intervention. Still, it must be said that with the developments taking place in the international markets – especially the continued rise in the price of oil and the price of cereals – the government must keep an eye on inflation, which is often a cause of economic distress that leads to public concern.