The Malta Independent 3 July 2025, Thursday
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TMID Editorial: Abela cannot ignore the signs

Friday, 21 June 2024, 11:53 Last update: about 2 years ago

Ignoring the problem will not make it go away.

But this is what the government is doing.

Last Wednesday, the European Union chastised Malta on more than one count, in particular about the energy subsidies that have now been in place for several years and which the EU wants Malta to gradually eliminate. This was not the first warning that Malta has been given about the matter.

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Yet, it in statement in reply, the government completely disregarded the recommendation, preferring to come up with a list of platitudes of how much it has done and is doing. It must think that people only follow the news on One and One Two (sorry, PBS).

The EU has now given a formal warning to Malta.

"In light of this assessment, and after considering the opinion of the Economic and Financial Committee, the Commission intends to propose to the Council to open excessive deficit procedures for these Member States in July 2024", the EU executive told Malta and seven other countries.

The Commission has called on Malta to submit the medium-term fiscal-structural plan in a timely manner and to keep the general government debt at a prudent level over the medium term in line with EU treaties.

The government seems oblivious to the debt the country is accumulating, in part because of the subsidies on power and fuel. But, sooner or later, it will have to come to terms with the idea that it must take action. Otherwise, there will be consequences.

The government is now caught between the proverbial rock and a hard place. It has been boasting for years that Malta is the only country where the price of electricity and fuel has been kept stable in spite of the international market. It has made this policy as one of the mainstays of its political approach and, also, the election campaign that has just ended.

If it were to veer away from this and remove the subsidies – suddenly or gradually – it would be throwing everything that it has stood for out the window. The business class is already expecting something to happen, because it knows that, one day, it will have to happen. So their suggestion is to be given at least a six-month advance notice.

Whether this will take place is anyone’s guess.

What is sure is that the government knows that, one way or the other, it will have to tackle the issue. The longer it takes, the worse the situation will become. Each and every day that is passing, Malta’s deficit and debt are growing. And each and every day that will pass, the EU will keep a stronger eye on what is happening in Malta.

The situation may have become worse for the government after the results of the election. If it was thinking of removing the subsidies knowing that it could absorb the loss of votes such an unpopular move would have led to – given the 40,000 advantage it had – now it can no longer make the same argument, considering that most of this lead has been eaten up.

Yet, on the other hand, it would be wrong for the government to take the populist approach and think solely about not losing votes in decisions that it makes.

It is a difficult moment for Robert Abela and his government. But, as we said in the opening paragraph of this leader, ignoring the problem will not make it go away.

 

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