Last week, this paper highlighted the figures published two days before by the National Statistics Office, which showed that the government deficit (the shortfall between recurrent revenue and total expenditure) for 2008 was estimated at e233 million.

It highlighted that this was far in excess of what the government had promised for the year, that is €68 million, and even more than the €200 million the government had estimated as recently as the last Budget Day.

Worse was to come. Last Wednesday the European Commission estimated that Malta’s deficit for the year was e266.5 million, or 4.7 per cent of GDP. As recently as last February, the Commission had estimated that last year’s deficit would turn out to be 3.5 per cent of GDP, higher than the government’s own estimate of 3.3 per cent.

Not surprisingly, as we report today, the Commission is planning to institute what is known as excessive deficit procedure against Malta and some other EU member States.

It was also reported that Malta registered the third worst budget deficit in all euro zone last year, after Ireland and Greece.

On Wednesday, after a statement by Labour’s Charles Mangion had spurred it, the government finally tried to explain and justify matters, as if those figures could in any way be justified. Unfortunately, the Finance Ministry’s statement came out two hours before the Commission came up with its revised figures.

The statement is poorly written and not cogently argued at all, so much so that by 5pm a correction of a detail was issued.

It argued that:

1. Government revenue was down due to the international crisis situation.

2. The government aims at protecting jobs, rather than keep to the deficit targets.

3. It asked what the Opposition would have done.

One wonders who this statement was aimed at: the public at large who does not understand finance, or to the fellow ministers around the table who would presumably be relieved by this declaration?

First of all, the government owes it to the people, if not to Parliament, to come up with a more cogent explanation of the inner structure of the economy, what is going wrong and how it could be made right. That ministry statement is unworthy of the country and its government.

For instance, at no point in the statement does the ministry touch on the expenditure side. It’s almost as if the expenditure side does not figure in the government’s mindset. Whereas what’s wrong is not just that the revenue did not come up to expectations, but also that the expenditure kept going at the same rate as before. For as the Governor of the Central Bank (so mistakenly targeted by the GWU paper over the past days) warned just a few days ago, one major factor of concern is the collective agreement signed with the representatives of the employees in the public service, which is back-loaded, i.e. it gets bigger as the years go by; and without any reference to the state of the economy at all. The remuneration gets better as the country’s economy gets worse.

As a corollary, there were the awful increases given by the government to doctors and professionals in the health service in its mistaken panic to get the new hospital to function as it was meant to – something which has not worked at all. Is it at all surprising that the teachers are now claiming some kind of parity with the health sector? There will be other categories that will take their place in the queue, mark these words.

The ministry’s statement does not have any inkling of admission that the problems with the Maltese economy are structural and require structural and painful changes, which have been neglected and postponed for many, many years. The ministry, and the government if it supports the ministry’s assertions, is badly mistaken if it imagines it can fudge its way with the European Commission and the ECB instead of tackling the real problems. And yes, tackling the deficit may be painful but it is the shortest and surest way to tackle the economic weakness of the country. Do that, and in time the country will re-emerge. Don’t do that, and the pain will be longer and deadlier.

Of course, faced with an Opposition that demands spending here and there and everywhere, and a country that is even more extravagant, the government cannot slash outflows without taking into consideration the impact on the country. And yes, as the ministry is saying, it is important that jobs are protected. With government expenditure being so great a seeding factor in the economy, even tinkering with the students’ stipends can impact on the country as a whole.

But there are still, we hold, wide swathes of spending where care and prudence could save huge millions. It is not just the ministry that gives the impression that there’s no big need for any care and control of public funds, anything and anyone connected with the government seems to have this mindset; that money is no problem and there is no relation between revenue and expenditure.

Having said all this, and more can be said, ultimately one feels the government will not heed any of our words, or anything that the Opposition or the country says. There is only one thing the government will heed – sanctions and worse imposed on Malta by the Commission. Which shows once again how wise Malta was to join the EU five years ago.

The very least we can ask for is a more sober manner of government.