The impact of Covid-19 and the war in Ukraine on economies around the world is there for all to see. It is a difficult time, when prices and inflation are rising internationally and also locally.

Everyone is in Europe is, in some way, being impacted.

There were no major surprise projects in the budget, but then again one wasn’t really expecting any this year. €608 million has been allocated for energy and fuel subsidies, which is a large sum of money. So obviously that money had to be pulled from elsewhere.

It’s a lot, but if this money was not spent, then the people would be directly paying the increases out of their pockets. The current situation should also be a wake-up-call for the country to make a serious push for renewable energy production.

A number of measures to support people financially were announced.

Pensioners are going to get a boost - €12.50 a week (inclusive of the COLA). This is a welcome increase. Pensioners who worked their whole lives have earned the right to rest and enjoy themselves. In order to do that, they must have pensions that allow them to cope with current prices. Stipends are going up by €50, a tax refund cheque will be issued to more than 250,000 workers, and an increase in the carers’ grant, for parents who do not work in order to take care of adult children with severe disability are just some examples.

Inflation is of course still a problem. The budget shows that inflation will be 5.7% at the end of this year, and is expected to fall to 3.7% by the end of next year. This is still high. The €9.90 COLA per week that was announced, and the introduction of a new COLA mechanism for vulnerable people (that should affect some 80,000 people) should help people cope with the rising prices. While businesses will not be paying for the new COLA mechanism, they will be paying for the regular COLA for their employees. This, of course, raises questions as to how this would affect businesses, although the Finance Minister previously told this newsroom during an interview that he does not expect businesses to close down because of this.

The figures released in the budget show that real GDP growth in 2022 was 6%. It is predicted to drop in 2023 to 3.5% - but that economic growth in the current climate is still good. In both instances, this is higher than the EU average (which was 2.7% this year and is predicted to be 1.5% next year). We must ensure that the economy keeps afloat.

One worrying issue is the country’s debt, which is expected to rise to 59.1 % of GDP in 2023, and peak in 2024 at 60.3%, before lowering slightly in 2025. Any more international surprises could have serious consequences on such predictions. The government must keep an eye on this and work to reduce it. If the last three years are anything to go by, we must expect the unexpected.

There was some immediate criticism as to the budget not doing enough to attract new economic niches, and more could have been done in that regard.

The predictions do, however, look towards a reduction in the deficit. One issue the government has right now is that total recurrent expenditure is higher than total revenue. This is a serious problem, however one notes that the amount of recurrent expenditure is far less this year than it was in 2021 – during the pandemic. The predictions show that recurrent revenue will be higher than such expenditure sometime in 2024. If that happens, that should help ease pressure on the country’s finances.

One must also highlight the need for the government to be more careful with the country’s finances than it has been in the past. The situation the country is currently facing is a testament to that. Yes, the country had the finances needed to face the Covid-19 pandemic, and seemingly has the finances to face the current challenges, albeit that the debt is rising as previously said. But let’s be honest, wouldn’t the country have been in a better position had it handled certain contracts better,  had it been more careful in terms of government recruitment of non-essential personnel? Are we getting the most out of the contracts we sign? How much better off would we be had our reputation not have been tarnished?

In terms of capital expenditure, more has been earmarked to be spent next year than this year, but a third of this will come from EU funds, which is a higher percentage than in the past. Capital expenditure is then expected to lower in 2023.

It is good that the government is continuing to invest in charging ports, and renewables, but realistically speaking we need to make a far stronger push in the coming years if we want to minimise pollution and the effects of international issues on our energy systems.