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Deficit could be as high as 3.5% - Prime Minister

Joseph Muscat says deficit projections can be expected to be way off the mark

miriam
Miriam Dalli
5 April 2013, 12:00am
Joseph Muscat said Malta's deficit was way off the mark as previously predicted by the former government.
Joseph Muscat said Malta's deficit was way off the mark as previously predicted by the former government.


Prime Minister Joseph Muscat today revealed that the government's deficit had surpassed the 3% of gross domestic product, putting paid to claims by the previous administration that it would take the deficit down to 2.3%.

"The public finances are not as they have been described, but they are how we expected them to be," Muscat said in a presentation on the budget, which he will take to the House on Monday after it was voted down in December 2012.

As Opposition leader Muscat voted against the budget even though he said his government will keep the budget's contents, including tax cuts for the 35% tier that will fall to 25% within three years' time.

"We will still be able to carry out our electoral programme. We won't complain. But our goal is to say how we will be moving forward," Muscat said, adding that Labour's electoral programme was based on EU and IMF projections.

"It is clear that political instability in 2012, that was finally resolved by the election, had an impact on government income with a corresponding increase, seeing the deficit surpassing the 3% mark. The final figure in hand includes accruals. We are expecting a deficit of anything up to 3.5% of GDP."

Muscat said he will retain the budget but aim for a deficit that goes below the 3% mark as demanded for eurozone members.

However this might still open Malta to the risk of an excessive deficit procedure.

The government's revenue was €157 million or 4.3% than what was expected for 2012, with forecasts for 2013 to increase revenue by €300 million now looking all the more difficult to achieve.

It will be finance minister Edward Scicluna who will present his plan on Monday to see how revenue and expenditure will be adjusted, even though the Budget will not be amended save for the tax cuts that previously would have eaten into the minimum wage.

"I am convinced that Scicluna's clear plan will enable us to reach our target. For example, we are talking to all heads of government entities and committees to understand their clear function," Muscat said, hinting at public expenditure cuts.

He also said that MEPA's former chairman was paid some €100,000 with a chief executive assisting him. "We told the new chairman to forget such a package, and that he would be remunerated at €17,000," Muscat said of Vince Cassar, who succeeded Austin Walker as chairman of the planning authority. "We're not tightening our belt, but being rational."

Muscat also said that with social services expenditure set to increase over the next months, there was a clear plan to increase utility bills. "Our energy plan will be on time with no repercussions on public finances," the prime minister said.

"Our challenge is the creation of jobs. We're starting consulting the private sector for their contribution, and next Monday we will invite both public and private sectors for their proposals, including infrastructural.

"We won't take political advantage of this situation, even though it was created by the previous administration. We have worked hard these four weeks towards financial consolidation, and we have to create jobs and address the upward trend of unemployment."

On other matters, Muscat defended the nomination of John Bencini to MCESD chairman. He said the council had a history of chairpersons mainly picked from the world of employers and that he wanted to see a rotation of chairpersons from unions, employers and civil society. "The MCESD is nobody's monopoly. Bencini will prove himself."

Muscat also told the press there was a clear distinction between the robustness of Malta's banking system and the fraught conditions of the Cypriot financial sector. "I urge the media to exercise prudence... much as the government of Luxembourg is saying, comparisons between our countries in this sense is not good."
miriam
Miriam Dalli joined MaltaToday.com.mt in 2010 and was assistant editor fr...
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Malcolm Mifsud
SB is now leader and what transpired before is now history. It is the image he manages to project from now till the EU parliamentary elections which will be the first real test of his leadership and to consecrate him as leader.To be honest I do not feel that at present he has the natural charisma to reverse and rally the party's fortunes. Contrary to Joseph Muscat who as a front line political journalist could get to understand the feelings of the general public, Simon has been sheltered from the rough and tumble of local politics and therefore appears detached and remote even given his cold smile. Of course with proper grooming by some of the party elders and good PR he can be given a makeover as I remember EFA was changed from a gawky village politician to one of the most charismatic and assured national leaders. He certainly needs Mario Demarco as a popular prop and second pillar provided Mario is willing to act as second fiddle if he is given enough space to operate as his father was given. He must certainly learn not to appear as a know it all but to communicate with people on their own simple terms and at the same time not be detached as Alfred Sant was from the silly mundane demands of the general population. Even if he masters the craft of local politics he still faces the formidable hurdle of challenging Joseph Muscat who is a natural leader who fully understands the local mindset and can rally the populace behind his positive inclusive approach to politics. We have to wait and see.
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Emanuel Cardona
Man in the street, x' ghandu x' jaqsam li jkollok maggoranza kbira ma li tghamel kabinett kbir????? Mela ghax hemm maggoranza kbira nahlu l-flus ?
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Beatrice Gatt
jekk il-budget li ghamel gvern ta PN nizel id-deficit , u gvern tal-PL ha zomm l'istess budget b'differenza li il paga minima mhux ha tkun intaxxata(tdan jista jaffetwa?) allura mhux suppost joghlla id-deficit!! i have no faith in this new government!!!
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WHAT!!!???? HAVEN'T WE BEEN ASSURED BY GONZIPN THAT MALTA HAS FINANZI FIS-SOD.!? NOW WE KNOW THAT THE PN ADMINISTRATION, WHICH WAS RUNNING THE COUNTRY TILL LESS THAN 1 MONTH AGO, HAD RUN A DEFICIT FOR THE PN OF OVER €8 MILLION, AND NOW OUR NEW PRIME MINISTER HAS STATED THAT THE COUNTRY'S DEFICIT UNDER THE PN HAD SURREPTITIOUSLY INCREASED FROM 2.3% TO 3.5%. CAN THE PN PLEASE INFORM THE PUBLIC WHICH ACCOUNTING AND AUDITING FIRMS THEY HAD USED TO COVER UP THIS MESS???
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GODFREY FARRUGIA
@ mikegold. Of course, and the deficit the PN left, and the huge debts, are also taghna lkoll, idiot. And not only the largest cabinet in history, but also the greatest electoral win in Malta's political history. Haven't you realised that the 'gahan malti' has voted the PN out in great style, and by 36.000 votes?
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Seriously! Vince Cassar accepted €17000 to run MEPA?
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Joseph is setting an example,moderate wages to the chairmen,and not sangi sugi.The members of parliament also did not get a rise.Before no control for people in high position but low wages to people working by monthly contracts Observe
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@mikegold. Il-klikka tal-hbieb tal-hbieb kienet l-iktar attiva fi zmien il-gvern tieghek. Issa dalwaqt jibda jinkiexef il-qerq ghax kontu tpingu kollox ward. Jekk Alla jrid bil-ghaqal tal-gvern Laburista nibdew intejjbu s-sitwazzjoni u nimxu 'l quddiem. U maghha ntejjbu l-finanzi ta' pajjizna u npoguhom verament fis-sod.
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Yanika Chetcuti
mikegold, if I were you I would wait till Monday, and then assess the situation as it really is. It was very obvious that most figures presented to us by GonziPN were obtained from Fairyland. What is important is the value that you get for your buck, and not how much you spend. Although that never stopped GonziPN from spreading lolly like there's no tomorrow!! No problem! The money ain't their own! Its yours and mine. All in the interest of vote catching of course. Didn't do no good though, 'cause voters aren't so gullible.
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@medsun: Unfair comment. The article is only reporting what the PM said.
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John B Camillleri
@medsun : Since Tonio Fenech first said that, contrary to IMF and EC predictions, deficit would be as low as 2.3%, which means lower than the 3% Maastricht criterion, now that we have the govt telling us it will be as high as 3-3.5% means that what the Nationalists told us during the general elections was bullshit. I'd like to see you justifying this, before casting aspersions.
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Hekka finanzi fis-sod kellna!
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Emanuel Cardona
Tajjeb u b'ghaqal kbir ghamel l-ikbar kabinett tal-istorja w qed iqassam postijiet lil hbieb tal hbieb. Issa min hawn u ftit iehor nibdew nissikaw ic-cintorin. Hallas gahan malti ghax l-ispejjes taghna lkoll
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Emanuel Cardona
Tajjeb u b'ghaqal kbir ghamel l-ikbar kabinett tal-istorja w qed iqassam postijiet lil hbieb tal hbieb. Issa min hawn u ftit iehor nibdew nissikaw ic-cintorin. Hallas gahan malti ghax l-ispejjes taghna lkoll
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Your headline could also have read - "Deficit could be as low as 3%" - but that doesnt suit your aims!