Labour’s stream of significant proposals in various key sectors has been greeted with a glum, negative “No, it can’t be done’ attitude by Gonzi and his coterie.

This is proof, if further proof is really needed, that the Nationalist Party is missing the wood for the trees. It is failing to realise that Labour’s proposals are underpinned by a commitment to modernise and evolve a fresh governance culture, ensuring that Malta and Gozo avoid mediocrity in favour of innovation. The hysterical reaction of the Nationalist Party transpires to be cheap political rhetoric on the eve of a general election. Many view this reaction as an extension of the incompetent culture of governance adopted by the current administration.

The present culture is one that has been translated into gross inefficiencies, ranging from a power station fuelled by harmful heavy fuel oil at exorbitant prices, and a hospital that took 17 years to build, to a failed public transport system, ailing government finances and inefficiencies galore.

The inefficient and unsuitable management of the finances of the Maltese islands gives the greatest concern. We look upon the second downgrading of Malta’s economy by Standard and Poor with a heavy heart, yet this downgrade, and its underlying causes, show that Labour’s vision for Malta and Gozo is bang on track. Our proposals are what this country needs.

This latest downgrade was no bolt from the blue. We have to look at Standard & Poor’s previous downgrading of Malta’s economy on 13 January 2012. The negative causes for the downgrading at that time included Malta’s relatively large contingent liabilities which stemmed, ‘inter alia’ from ‘Enemalta, the country’s ailing energy utility’. In the opinion of standard and poor’s, structural issues, such as very low female participation in the workforce and relatively weak competitiveness -- also hindered Malta's medium to long-term growth prospects. Standard and Poor’s had stated at the time that there was at least a one-in-three chance that they would lower the rating again by 2013 if Malta's growth deteriorated beyond baseline estimates. Other reasons given by Standard and Poor’s for lower ratings included the possibility that government's interest burden, as a proportion of government revenues, would continue on an upward trend.

Standard and Poor’s declared that they would likely keep the rating at the current level if Malta's growth outlook, fiscal deficit, and overall level of general government debt stabilized.

However, the Gonzi government spent 2012 toiling on how to retain power and failed to address pressing issues, which led our country to a further credit downgrade.  Standard and Poor’s has now actually further downgraded Malta’s rating into the ‘B’ category despite the warnings the Gonzi government received from, among others, the Central Bank and credit rating agencies. This downgrade is therefore Malta’s second downgrade since November. This is a certificate of incompetence in economic management.

In its rational, Standard and Poor’s referred to Dr Gonzi’s gradual loss of fiscal flexibility, the recurrent budgetary risks caused by loss-making state-owned enterprises, the external vulnerabilities of the narrowly based economy, and structural issues such as a high private-sector indebtedness; a very low female labour force participation and the fact that gross general government debt has risen to just above 75% of GDP which could continue to increase on the back of weaker-than-projected growth or stock-flow adjustments. Given its high government debt burden, Standard and Poor’s is of the opinion that Malta possesses limited fiscal space to counter prolonged periods of lower growth.

We now have a clear result. Standard and Poor’s lowered Malta’s long-term sovereign credit rating. This means that this downgrade is not influenced by short term issues such as the conformation of Malta’s Budget estimates but is a result of structural inefficiencies in economic management. The GonziPN economic management is botched by Bureaucracy, Broken Promises and Bad for Business – BBB.

There can be no stronger case to show how this second downgrade exposes GonziPN’s bluff. Its economic planning and management has led us to this sorry state. The economic results achieved by the current administration are no good news for our country. Labour is all for economic growth and a better standard of living for all families. Standard and Poor’s downgrade proves that the key issues left to fester under Dr Gonzi’s exhausted stewardship need to be addressed. Our economic vision for Malta embraces the need to speedy and effective action. Our country has lost too many opportunities, too much time. The time to change direction is, indeed, now.  

Stefan Zrinzo Azzopardi is PL president