We are all aware of the recent Financial Action Task Force (FATF) outcome. Whilst acknowledging our misgivings, pointing figures and engaging in a dire process of scaremongering is utterly futile. What we, definitely, need is a concerted effort to convince the FATF that we are committed to deliver and getting back on track, leaving behind the shameful grey listing bestowed upon us.
In October 2019, Iceland had been grey listed by the FATF, alongside Mongolia and Zimbabwe, due to its bland legislature concerning money laundering and its lethargy in monetary reform. Within a year, the Icelandic government responded to the criticism, primarily by introducing legislation on the registry of beneficial owners of companies. In June 2020 Iceland had met in a satisfactory way the FATF’s requirements and in the following October it was removed from such a list.
We too as a nation can do this! We do possess the necessary human resources to deliver what needs to be delivered. A key player in this process is the current Minister of Finance, Clyde Caruana who took over last December from the eminent professor of economics and colleague of mine in academia, Edward Scicluna, after the latter announced that he was stepping down from his cabinet position.
Apart from the current FATF issue let us not forget that Clyde Caruana had to take on the baton from his predecessor at an unprecedented time. To his advantage, Professor Scicluna took on the role of heading a highly important institution in the financial framework of our island-state economy, namely, the Central Bank of Malta.
In this context I have to express my dismay at the current opposition for attacking Professor Edward Scicluna and asking for his removal as Governor for the recent FATF’s decision. May I politely remind the opposition that all and, I reiterate, all foreign institutions respect Professor Scicluna and I am more than certain that he will assist in any way possible to get Malta back on track.
Yet beyond the immediate need of dealing with FATF, fathoming the economic fallout from the COVID-19 pandemic necessitates contribution from technocrats such as Clyde Caruana and Professor Scicluna. When considering the far worse situation our EU neighbour, Italy are in, an obvious choice to head their government was Mario Draghi, (a highly respected technocrat) who until recently was entrusted with heading the European Central Bank. In the months to come we will be able to realise how important it has been to have the right people in the right places. Global economic disparities will become ever more evident as we become more aware of those countries that are fully vaccinated versus those that lag behind.
All in all what makes an ideal Finance Minister?
Through a social media chat I had nearly ten years ago with the late Lino Spiteri I managed to extract what are the right ingredients which would make an ideal Finance Minister. According to him it takes three ingredients – 1. Having good grounding in finance and economics so as to be able to decipher what the current economic climate is, 2. As a consequence moving swiftly with the right course of action needed in the circumstances and in so doing understand what advice is being suggested to him by his aides and 3. Be a good writer so that even most of the budget speech will be authored by him. I would add a fourth one, a good communicator.
Starting from the latter in recent days we have seen Caruana providing concise and concrete answers to valid questions put forward to him by various journalists. He is able to utilise his mother language in providing explanations that any citizen can immediately understand. He is indeed an effective communicator!
Having been instrumental in establishing our current employment policies whilst heading JOBSPLUS coupled with the handling of all fiscal initiatives to counter the negative economic consequences from the current pandemic provides clear evidence of his command of the interplay between finance and economics. That addresses the first and second ingredient, above.
What we still have to wait for is Caruana’s ability to write his own budget speech. It will be an interesting one given that it will be the last one before the next general election. So, not only will he be wrapping up the current legislature’s initiatives but projecting what we should expect to come next. Given the weight the upcoming budget carries with it I am more than confident that Caruana will be putting pen to paper and informing the Maltese population of their national finances in his own lyrics! Let the current economic success continue to prevail as we too continue to weather the negative consequences of the current pandemic.
Ivan Grixti is a senior lecturer in Financial Accounting at the University of Malta