“The economy is accelerating for a reason. Things are being done, obstacles are being removed, and solutions are being found. More work remains to be done of course, but we can look ahead with optimism as the country is moving forward,” said the Minister for Finance Edward Scicluna.
The Minister was speaking during an EY Economic Forecast Initiative held on Thursday 26th March 2015, during which EY presented economic forecasts for Malta and the Euro zone. EY’s forecast local outlook for 2015 expects lower energy costs to fuel consumer spending in 2015.
The forecast remarks that lower electricity prices, the reduction in charges for business, and average inflation of just 0.6% in 2015, will boost consumer spending “by at least 2% both this year and next, helped by lower unemployed (pushed by an improved female participation rate) and positive real wage growth.”
EY also expect “the fiscal deficit to narrow to 2% of GDP in 2015 as revenues (up almost 13% in January-November 2014) remain strong” and “the debt burden to ease from 69% of GDP now to under 64% in 2019.”
Welcoming EY’s Forecast for Malta, the Minister for Finance said that the Government is determined to reach its fiscal targets because it recognises the importance of safeguarding an economic climate that is conducive to investment.
He notes that investment and diversification is important, but it is also important to ensure that the fundamentals for investor confidence, such as a stable economy that is growing and safeguarding its momentum, are present.
In this regard, the Minister said that the Government is undertaking bold efforts across the board, such as in transportation and the availability of capital and financing for enterprises, to ensure that this is the case.
“Enterprise grows because the right environment is in place,” the Minister said, adding that the issue of bureaucracy is also being addressed, as policymakers often find themselves wasting precious energy on finding ways and solutions to achieve the desired objectives.
Minister Scicluna also noted the importance of the recently-established Fiscal Council, which will function as a watchdog for the current and future governments and ensure that these adhere to their fiscal targets.
The Council will begin operating soon by monitoring the government’s fiscal policy, and assessing all policy documents produced by the government, such as the budget speech and documents, and other interim reports and reviews.
Minister Scicluna added that the Fiscal Council will also be reviewing the Stability and Growth Pact and National Reform Programme, two documents which will soon be presented to the social partners for consultation, and later submitted to the European Commission as part of the European Economic Semester.
Minister Scicluna also welcomed the manner in which the ratio of investment as a proportion of GDP registered an increase of 1.4 percentage points in 2014 following two decades of decline.
“This shows that we are successfully increasing the growth rate of the economy, not as a one-time push but as a sustainable trend. We are very glad that it will continue growing thanks to new proposals for investment such as the Barts Medical School in Gozo, with other yet to be announced.”
Minister Scicluna also welcomed EY’s initiative to issue an economic forecast, noting that while periodic economic forecasts are issued by institutions such as the European Commission, the IMF, and rating agencies, EY’s initiative represents the perspective of the private sector.
