It has been said that Year’s End is neither an end nor a beginning but a going on, with all the wisdom that experience can instil in us. In normal circumstances, it is also supposed to be a time of anticipation – one that aspires to some degree of progress.
It has been said that Year’s End is neither an end nor a beginning but a going on, with all the wisdom that experience can instil in us. In normal circumstances, it is also supposed to be a time of anticipation – one that aspires to some degree of progress.
This time round, however, Malta has just crossed the threshold of a New Year in difficult circumstances. It broke loose from 2009 with a record e400 million deficit (at end November). It was overwhelmed by a rising tide of national debt, which is still rising. To cap it all, Malta’s tax burden has been jacked up significantly as from Day One 2010,
The overall picture is by no means pretty to behold. As the malaise developed, Maltese politicians, egged on by the media, were distracted by side issues of relatively lesser importance.
It is a fact of life that, over the years, the Maltese body politic has been overwhelmed by the high intensity of a chronic fever – political polarization. The fever has masked the nature of a disease that has been endemic for the past two decades and more.
While the polarization fever continues to rage, the public debate intensifies. Public opinion gets more and more entangled in a miasma of empty dogmas, claims and counter-claims, sound bites and the complicated details of hidden agendas, all of which are deliberately meant to distract attention and to sidetrack the confused electorate.
But the core issue is Malta’s survival. Survival depends on sanitising Malta’s public finances and restoring buoyancy to the island’s economy. It is an issue that calls for national concentration and resolve. It is one of utmost urgency.
During the last two decades, the Maltese economy has been pushed dangerously in the direction of a black hole. In the absence of timely, last minute measures, there is a real danger that it will be sucked in and devoured.
Public finance lies at the heart of the political process that precipitated the danger. Like a dagger, it is being pointed threateningly at the heart of Malta’s exhausted economy.
Driven by a ‘money no problem’ philosophy, local government expenditure rose from Lm240 million (e546 million) in l986 to e2,421 million last year. This spending spree gave rise to a structural deficit. It was sustained by rising debt. A false and illusory ‘feel-good’ climate prevailed for a time … until the kissing had to stop.
The level of national debt soared from Lm63 million (e154 million) in 1986 to a mind-boggling total of e3.977 million last August. If state-guaranteed loans taken by public enterprises are included in the equation, this figure begins to approximate Malta Gross National Product!
Like Mount Everest, this black hole is there, and no amount of sound bites, and assorted efforts to conceal it will change the facts of life.
The one obstinate reality that underlies Malta’s predicament is that public expenditure has continued to rise, and so has the level of public debt. The spending spree is projected to continue during this financial year.
Very clearly, this profligacy is unsustainable.
The tax-paying community has been taxed bone dry and the economy is under severe strain. Immediate future prospects are by no means bright, as the world recession takes its toll, with liquidity problems, signs of declining consumption and loss of competitivity bedevilling the situation.
This sombre reality will not go away, nor will it evaporate in the hype and the heat of political polarization. And it will persist whether or not the present government looks the other way, or whether a government-in-waiting takes over at any given time.
If the economy is to be rescued, it has to be saved primarily by local endeavour, and by a brave resolve to make amends for the excesses of the past, within the parameters of social justice.
To run away from the problem, or to pretend it is not there, is to court disaster. The challenge is urgent, and the range of remedial permutations is restricted. It will call for a heavy dose of medicine and, very likely, even some surgery.
It serves no purpose if politicians continue to rant about the mistakes and mismanagement of the past, although it would be wise to remove the culprits and to remove them from harm's way without further delay.
The real and urgent challenge is to come up with solutions that will restore confidence, lead to growth and give buoyancy to the economy. The foremost and most urgent imperative is, on the one hand, to reduce the cost of government and to restrain the level of public expenditure to manageable proportions and, on the other, to rally and incentivise all the forces capable of contributing to Malta's ability to augment its foreign earnings.
This calls for leadership as well as the ability to harness the cooperation of all can-do elements willing to save Malta from its predicament and, in the process, to save themselves.
The first and obvious step is to exorcise the devils of polarization that have afflicted the Maltese body politic for so long, and with growing intensity during the past year.