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Karl Schembri
The executive director of the government committee responsible for the switch to the Euro by January 2008 has warned for the first time that “if we keep on going like this we’ll surely not adopt the Euro”.
In an interview with MaltaToday, Alan Camilleri, the Prime Minister’s former communications coordinator and present head of the National Euro Changeover Committee (NECC), said he was extremely concerned with the rising cost of living that would exclude Malta from switching to the European currency.
“Our major concern is the need for the Euro not to increase prices, we are already worried about the inflation rate,” Camilleri said, just at the start of a new NECC campaign targeting retailers to display Euro prices. “If we keep on going like this we’ll surely not adopt the Euro, so it’s a question of in a sense managing inflation.”
Camilleri said the campaign for dual pricing, which will remain voluntary until July next year, should provide “a certain stability to pricing”, but government and businesses had to manage inflation to be able to meet the European Union’s demands for a changeover to the Euro.
“I am very concerned, I cannot but be concerned, because obviously we are moving in the right direction on a number of fronts and criteria except inflation,” Camilleri said. “Government can do a lot but it’s still limited, it’s not like the general government debt or the deficit. Government there has a 100 per cent control, but not on inflation. Probably the private sector won’t enjoy hearing this but it needs to understand that it has a role to play in managing inflation.”
The EU will decide on Malta’s eligibility to the Euro according to what are known as the Maastricht criteria, with inflation proving to be the hardest decisive factor. Malta is already above the allowed maximum inflation rate at 3.1 per cent, and the EU is taking note of it every month since last June to draw up an average when it gets to decide at the end of June next year. The allowed maximum inflation rate, known as the reference value, set right now by the EU is currently 2.8 per cent.
“One third of our reference period is already out, that is gone, we only have a chance to lower it over the remaining months,” Camilleri said.
Citing Estonia’s example, which has already twice postponed its changeover to the Euro with the people in charge resigning en masse, Camilleri said the effect of Malta missing the target date would be public cynicism and massive demoralisation of all the organisations working with NECC although he would not commit himself on his resignation.
“So far I have no intention of resigning, but it is an issue not because people will resign, but because it will become more difficult to reach the next target, because you have to start afresh, and people become more cynical,” Camilleri said.
Last Sunday, junior minister for finance Tonio Fenech said he was confident he will see inflation going down, saying it was not “cause for alarm”.
“We are still above the reference level but it is not a difference that cannot be bridged,” Fenech said.
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