There was a lot of expectation on the pre-budget document in view of the prevailing difficult international and local economic scenarios. Political and economic observers were clamouring to get an idea of how the government is seeing the country and what it thinks should be done to alleviate the hardships of families and businesses and how to stimulate the economy.

We had all learned to look upon previous pre-budget documents as leaders of economic and fiscal direction. government would throw in a couple of hints in the document on what ought to be done to stimulate growth, in the process stirring up debate among the social partners and within civil society itself. It used to be a useful exercise in the formation of the final budgetary estimates for the following year.

This time round however the pre-budget document left much to be desired. It merely presents an in-depth analysis of the strengths and weaknesses of the economy and government finances, like NSO or Eurostat statistics, but has no concrete proposals on what the government is contemplating for the budget. So much so that at the launch the finance minister himself had to concede that the government did not want to come up with a document containing pre-conceived ideas but wanted to hear from the public as to what they were expecting. Then, why present a document in the first place? In other words he had nothing to say.

Now this is rich considering that last year's pre-budget document contained very stimulating ideas and proposals, although I did not necessarily agree with all. Nonetheless I had enjoyed reading the document immensely. In the present economic climate I, for one, would have expected the government to take the lead and present a document that would be by far more challenging, stimulating and daring than all the previous ones. On what are we supposed to start debating?

Our exports are dramatically falling, consumer confidence is at an all-time low, the cost of living is very high, unemployment is rearing its ugly head and what we get is a pre-budget document that says little if at all on how the government proposes to tackle these problems. At least one would have expected some dynamism or enthusiasm. Frankly I got the impression that the government still hasn't got the slightest idea about what it should do and preferred to hide behind a pot-pourri of statistics in the hope that by November this year it will have been illuminated by divine intercession and come out with a budget with chutzpah.

But if the statistical jungle of the pre-budget document is devoid of any concrete proposals, save the minister's pledge to retain the COLA mechanism, it served to dispell forever the myth created by the Government that Malta is a Mecca for foreign investment. Although the pre-budget document says that foreign direct investment is the strongest on a comparative basis with the EU average, in page 83 it is conceded that: “a significant share of this Foreign Direct Investment is in the form of capital inflows in the financial sector and is of a financial nature. Moreover, a substantial amount of the financial inflows pertain to international banking institutions which do not operate in the local market. Therefore the financial capital introduced in Malta is unlikely to be contributing to the necessary liquidity to finance domestic investment expenditure.” Period!

Also, the presented statistics defy some of the forecasts made by the finance minister at a business breakfast on 3 July - barely a month ago. Then he had predicted that in regard to the cost of living there would be a deflation of 0.7 per cent in the second quarter of 2009 and of 0.6 per cent in the third quarter. The pre-budget document confirms that instead of a deflation of 0.7 per cent in the second quarter we had an inflation of 3.4 per cent. If the minister is relying heavily on his July forecasts in weighing the COLA for the next budget then he is in for an ugly surprise!

Government has already made some awful predictions about GDP growth for 2009. I sincerely hope that all these forecasts and predictions have been based on political expediency and not on hard economic judgement. Because if the Government really believes in its own forecasts then we're in for a really hard time in 2010!

(Dr Gulia is the Opposition's Main Spokesman on the Economy and the Self-Employed)