It is a known fact that several countries were badly hit by the international economic crisis. While a number of these seem to be on the way to recovery, there is as yet a number that are still struggling, a few of which are carrying heavy deficits that may have serious repercussions.

Greece’s financial problems have prompted suggestions that the 27 members of the European Union may have to bail the country out.

According to economic wizards, the situation has caused fears about the stability of the 16-country euro area if markets’ doubts about Greece spill over to other countries with large deficits. In fact, the Greek debt has spread to Spain and Portugal in a dangerous escalation.

The key fact about the eurozone is that it represents a monetary union the policy of which is set by the European Central Bank and whose main job is to set interest rates for the entire eurozone. The eurozone is not a fiscal union.

Debts and more debts

Greece owes some e220 billion to overseas banks, which is equivalent to 115 per cent of its gross domestic product. Spain and Portugal may eventually end up in the same situation as Greece.

Spain, at 19 per cent, has the highest number of people currently unemployed in Europe and the Socialist Prime Minister Zapatero has asked for the cooperation of the Opposition to introduce more austerity measures. In his efforts to curb the alarming situation, the Socialist Prime Minister of Greece, George Papandreou, has introduced a salary freeze, a higher retirement age, changed the tax scale and promised to fight tax evasion and spending cuts. He also named a number of internationally renowned advisors.

Portugal’s deficit is expected to hit 9.3 per cent of its gross domestic product, public debt is expected to climb to 85.4 per cent of GDP and nine per cent of its workforce are unemployed, including 60,000 with an academic degree.

These countries face serious budget crises which, according to experts in this field, may threaten to derail the 10-year old eurozone and may even cause another world-wide credit freeze.

Thanks to the rather stiff and sometimes unpopular measures that we have introduced over the years, we are able to meet these clear challenges with confidence.

Now we are all appreciating the wisdom of those who were behind our financial planners. We have certainly planned well and with our sound banking system, which has retained high ratings by international agencies, we have avoided recommendations or orders that would have been forced upon us, had we failed to take the necessary measures when we did.

Admittedly, we have had a few problems, when certain factories were facing difficulties because of a lack of orders, but thanks to the government’s direct intervention and financial assistance, some 2,500 jobs were saved. It is true that our national deficit has increased, but it is worth adding that some of the factories that were previously faced with difficulties before obtaining government aid are now expanding and will have newcomers on their payroll.

Apart from direct interventions such as subsidies, which are necessary in such times, over the years the government has made strategic changes to modernise the Maltese economy. Such changes, including the robust legislation regulating the financial sector, have brought about high value added industries and high value added employment.

Creating jobs is our priority

The creation of jobs remains our top priority and, on a positive note, Malta is still attracting investments which in the end mean more jobs. SR Technics, and the decision by EasyJet to have its fleet of 157 aircraft serviced by this company in Malta, are clear examples. EasyJet has a e1.6 billion contract with the Swiss-based company. The e45m investment by Island Hotels in the old Hal-Ferh holiday complex means an increase of about 200 in its staff numbers to a total of over 1,200, while Hotel RUI Seabank is also embarking on a €30m extension to add 340 rooms and obviously increase the number of staff it employs. Playmobil’s success story continues, with an investment of e11m on an extension and the introduction of new technology.

These are only a few examples of the present state of affairs in Malta, giving ample proof that, although our economy faces challenges of a different nature to those of the “weaker economies” of Europe, if we stay focused and take the necessary measures, we can already see the light at the end of the tunnel.

Clyde Puli is a Parliamentary Secretary within the Education, Employment and the Family Ministry