The government is confident that its policies for economic and fiscal stability and sustainability will yield desired results, Edward Scicluna says.
The government was addressing the concerns pointed out by credit rating agencies, the finance minister Edward Scicluna reassured.
“The government is aware of the economic and fiscal issues referred to by credit rating agencies Fitch and Moody’s in their latest reports, and is indeed addressing them,” Scicluna said.
Yesterday, credit-rating agency Fitch downgraded Malta to ‘A’ from ‘A+’, and said that the Labour government has not provided ‘clarity’ on how it will cut spending with the deficit set to burst to 3.6% in 2013.
Referring to Fitch’s report, Scicluna noted that its conclusions reflect the consequences of the poor fiscal performance registered during 2012 which led to a deficit of 3.3% of GDP – well above the previous administration’s target of 2.2% and Fitch’s own September 2012 projection of 2.6% of GDP.
He said the significant fiscal slippage, “a situation that the new government has inherited,” was recognised by various international agencies, including the International Monetary Fund, as being linked to excessive spending and overly-optimistic revenue projections during the period leading to the 2013 General Election.
“With its decision, Fitch is echoing the same position adopted by other international Credit Rating Agencies in 2012 prior to the election, which had expressed considerable scepticism regarding the fiscal targets announced by the previous administration,” the minister said.
Scicluna added that Fitch’s report is a fair assessment of how Enemalta’s precarious financial situation is endangering the stability of Malta’s public finances.
The finance minister added that the Labour administration “is undertaking several initiatives to curb public expenditure, increasing efficiency, and maximising revenue. Through this programme, the government is aiming to close 2013 with a deficit below 3% and about one percentage point less than what other independent observers are forecasting.”
In its report, Fitch recognised how the Maltese economy has kept up its moderate pace of economic activity, lowered the inflation rate, and is creating more work.
Moreover, Scicluna pointed out that Eurostat recently confirmed that Malta is enjoying the highest annualised rate of employment growth in the EU, which in the second quarter of this year stood at 3.6%.
“The government is confident that its policies for economic and fiscal stability and sustainability will yield the desired results,” Scicluna said.
Saturday 21 September 2013