The Government is trying to downplay its unprecedented fiscal slippage just in its very first year of its Eurozone membership.
This Budget, more than any other past budget, is rightly being analysed for its economic management content, rather than for the one cent tax here and the two cents benefits there traditional review. In this case this Budget raises serious questions about our prospects of ever obtaining a sustainable public sector and with it sustainable public finances. The European Union has often warned us that sustainability is not shown by a series of one-off revenue generation schemes. Neither by a quick resort to quick tax and spend programmes.
The Government is trying to downplay its unprecedented fiscal slippage just in its very first year of its Eurozone membership. My evaluation shows that the problem is deeper. We have yet to see a declining Debt to GDP ratio caused by sustainable finances rather than merely by privatisation proceeds.
The appetite for painful reforms has been diminishing and the electorate has been regaled with a picture of an economy which was ripe enough to start delivering the fruits borne through painful toiling years before.
Under normal circumstances the Government would have found it extremely difficult to make up for these misguided and confusing signals. In the present circumstances the problem has become very much more complicated. There are now at the same time enormous pressures to let go and counter pressures to contain the deficit. In this scenario the economist has yet to look forward to the day when he can be convinced that our country can ever achieve sustainable public finances with the currently unreformed and deeply ingrained attitudes. But today does anybody care?
Times of Malta – 4th November 2008