The sudden news of a fiscal surplus in the government’s accounts stunned a small section of the people who still live under the past, foolish pre-election illusion that a Labour government would be unable to deliver on its promise of good fiscal and economic governance.

A state of denial is normally associated with traumatic incidents and can express itself in various ways. Indeed, the reactions to the surplus by the Opposition could not but be categorised as such when one examines the various responses given so far.

One version was that this was a planned scoop, timed to coincide with the Opposition European People’s Party annual convention in Malta. Admittedly, the coincidence could not have been more opportune, since those who wanted to denigrate their country with our European visitors had the rug pulled from under their feet in the face of the collective admiration for a small country’s financial feat. But it was definitely not planned. As indicated on its website, the NSO calendar announces, a year ahead, the exact date on which each national economic statistic will be published.

Another version was that the government had produced a surplus through a cheap “easy” trick: you reduce capital expenditure by the amount of the deficit and – hey presto! – you have a surplus. Yes, tell that to your deficit and debt-burdened European colleagues when it is your turn to tell a joke. But seriously, do our shadow Finance Minister and his boss not know that EU-funded projects are just that: EU-funded, so whether they go up or down, their effect on our public finances is only marginal and almost neutral? For every €100 million by which we increase/decrease) our EU-funded capital expenditure, the government gets €85 million of revenue more – or less. It is only locally-funded projects that have an effect. Did the purely locally-funded capital expenditure for these public projects capital expenditure go down in 2016? Far from it: it went up, thus certainly not helping the government to, so to speak, ‘make’ a surplus.

The latest version is that there is some fiscal truth of which the Opposition may be aware that has bypassed the European Commission, the International Monetary Fund missions, even by all the five rating agencies. The arguments for this assertion are certainly not helped by the addition of a number of economic howlers. One is that “The government’s increasing revenue over the past years is due to the international economic climate.” I wonder why the European Central Bank bothered with the extraordinary recession antidote called ‘quantitative easing’ during the same ‘boom’ period.

Worse, it is an entire argument based on a false syllogism, namely that since investment is good for the economy, and investment requires one to borrow, then all borrowing in the past was good. Were this reasoning not obviously false, it could perhaps absolve the past Nationalist administrations from the over €5 billion debt accumulated over the past 25 years of uncontrolled current expenditure. In fact, if one were to add up all the capital expenditure from 1987 to 2012 one would find, not surprisingly, that the total is just an insignificant proportion of that more than €5 billion debt.

The real truth shows that the situation was much worse. Both the Freeport and the Delimara power station were financed by a bullet loan because the government did not want to find the finance to refund the capital over the lifetime of the project. In the latter case, the capital payment has been rescheduled over the next 15 years – a surrealistic situation with electricity consumers paying a tariff to finance electricity from a power plant that no longer exists.

Only the interest payments could be afforded. Yes, the annual past increases in government borrowing and therefore deficits went to finance current expenditures not covered by revenue and were not solely earmarked for investment.

One therefore cannot but face the criticism by people with such an abysmal public expenditure management with a bemused expression. They are now scandalised to see that the successes of the country’s economic achievements are being enjoyed through a prudent matching of increases in collective consumption.

There is nothing wrong with this, as long as you keep to the simple but effective rule that the rate of increase in public expenditures falls short of the rate of increase in the country’s nominal growth.

That is why the government has succeeded in lowering the deficit and the national debt successfully over a four-year period. Malta’s surplus is, in fact, nothing but an attestation that the government’s fiscal prudence has kept strictly to that rule.

Prof. Edward Scicluna is the Minister of Finance