Government seems to be losing its economic plot. Over and over again Labour government is failing to put its their money where their mouth is.

Current economic indicators, which have become persistent in recent months, are signalling a warning, alerting the government to the fact that an immediate economic strategy for job creation, sustainable investment growth and a clear vision must be presented.

Government’s deficit

This week, the Finance Minister has given assurances that the government will meet its 2013 2.7 per cent deficit target. Let’s hope so! However, when analysing the latest official figures regarding the government’s deficit, Labour’s pledge seems much less feasible. The deficit from January to September 2013 stands at €241.4 million. This means that, if a surplus is not on the government’s cards for the last quarter of last year, Labour’s guarantee to the European Commission to push down the deficit to €191.3 will seem to be quite a far cry off.

Hence, if the government’s vow to reduce the deficit to below three per cent is not honoured and, to the contrary, the European Union’s projections that it will actually rise to 3.4 per cent turns out to be more credible, then Malta will remain in the Excessive Deficit Procedure. The government must be more convincing in practice and beyond its customary lip service to the effect that our public finances are actually on track.

Employment Creation

What the Labour government has indisputably failed to accomplish so far is the ability to execute a clear strategy for job creation. Month after month we are being presented with worrying statistics on the number of registered unemployed, which has been steadily on the increase and has now reached 7,619. Moreover, Eurostat has confirmed that we have been knocked down a notch from being the EU country with the fourth lowest unemployment rate to that of fifth. The government is responsible for ensuring that this will not develop into a trend that will see our unemployment soar, without coming up with a concrete and factual plan on how to mitigate the risk of losing control over job creation.

However, instead of a concrete plan, the Labour government has taken us back to the 1980s, with a bold decision to fatten the civil service by a staggering 1,000 people, at the expense of €22 million from public coffers in just three months! By boosting the public sector as a major player in employment, the private sector, which is the motor of our economy, will fall behind. Government should come up with initiatives to strengthen the SMEs, to ensure their sustainable economic health and not suffocate them through unfair competition.

Stay away from undue interference!

The global economy is slowly on the recovery and our country, which managed to sail through the toughest seas, should not fall behind now. Now, more than ever, is not the time to play with fire. The government should steer away from any undue interference in the financial sector, a sector that has been a catalyst to our economic growth, contributing eight per cent to the country’s Gross Value Added. If the government persists in politicising this sector, then we are seriously risking it losing its long-established competitive edge. The Opposition has previously warned the government not to interfere in the management of the Central Bank, whose autonomy should remain intact.

Government’s latest manoeuvring in Bank of Valletta is reprehensible. It is the majority shareholder in the bank and has the prerogative to appoint a non-executive chairman. And that is where it should stop. Hence, the setting up of a grievance unit by the chairman, and the irresponsible manner in which the numerous promotions were granted to Labour Party loyalists, proves the short-sightedness of the government. Reputation and credibility is key to the sustainability of the banking sector. Good governance in the financial sector has always been a significant factor to its success. If the government starts introducing party politics and flirting with its autonomy then it could well be the beginning of its end.

The banking sector has a massive potential to further its growth. If nurtured well it is a step away from taking its quantum leap. This can be achieved if Government will present a condensed plan for the sector of how to promote Malta as a financial hub. Government must seriously be committed to strengthen the whole financial eco-system by further investment in the human resources, driven by an attainable plan to ensure further development of this vital sector.