Lawrence Gonzi Has lost control of government’s finances

Lawrence Gonzi Has lost control of government’s finances – PL

Malta Independent Tuesday, 30 June 2009, 00:00 Last update: about 13 years ago

The declaration by finance, economy and investment minister Tonio Fenech, that the government cannot promise that Malta’s deficit will be reduced by three per cent by 2010 according to European Commission (EC) directives, is a confirmation that PM Lawrence Gonzi lost control of the country’s finances, said PL’s Charles Mangion in a statement yesterday.

Although the deficit increased, it did not empower capital investments to generate more work but went on useless expenses from which Malta’s economy did not benefit, he said.

Minister Fenech’s declaration is weakened by his own Budget 2009 estimates statement that the government was to reduce the deficit by 1.5 per cent of the Gross Domestic Product (GDP) by 2009 and a further 0.3 per cent by 2010, added Dr Mangion.

The PL had criticised Lawrence Gonzi for not stating the way things were and that the government will not reach its set targets.

Dr Mangion added that PL’s predictions were right as the 2008 deficit shot up by 4.7 per cent of GDP and the EC triggered procedures against the Maltese Government.

The EC did not believe Dr Gonzi’s assertion that the deficit was due to the recession or other temporary exceptional measures to support the economy, he said.

Minister Fenech’s reaction proves that the government is locked between its recurrent expenditure, which is growing at a higher rate than that of the economy, and the receding economy, said Dr Mangion. On the other hand, while the receding economy is yielding less profit, the EC is forcing the government to respect Eurozone regulations, went on Dr Mangion.

This is leading the government to reduce its capital expenditure despite its promise of increasing this by 1.3 per cent of GDP or by 25 per cent in 2009. In 2008 capital expenditure was reduced by 15 per cent while in the first five months of 2009, capital expenditure was further reduced by 8 per cent, Dr Mangion said.

Such inefficiencies lead to serious consequences on Malta’s economy as this might lead to less work opportunities and less economic growth for a sustainable future, said Dr Mangion.

Maltese families are paying for Dr Gonzi’s loss of control of finances, he said. This is why utility prices shot upwards leading to a higher cost of living and the highest inflation rate in Eurozone for the past eight months, concluded Dr Mangion.