Inflation here to stay

Last Thursday, the European Central Bank (ECB) defied calls for a pause to take pressure off the weakening Eurozone economy and raised the key interest rate to a record high as it battles soaring inflation,

The central bank said rates had now reached levels that would help bring inflation back to target, and some analysts said it signalled the current hiking cycle was at an end.

Policymakers raised rates by another quarter point, taking the closely watched deposit rate to 4%, its highest level since the introduction of the euro in 1999.

It marked the 10th straight increase since the ECB launched the most aggressive hiking cycle in its history in July last year after prices surged following Russia's invasion of Ukraine.

This decision does not seem to have been foreseen by our Finance Minister Clyde Caruana, when he addressed the media and social partners during a meeting in preparation for the upcoming Budget held last Monday with the Malta Council for Economic and Social Development (MCESD). While the ECB talked about bringing inflation back on target, Clyde Caruana warned that inflation is here to stay for an indefinite period of time. He added that government aims to deliver an expansive Budget for next year, despite external pressures.

Perhaps, his speech must be revisited in the light of the then pending ECB decision that was reported on Thursday.

Caruana said that next year’s Budget will still be an ‘expansive’ one, despite inflation rates going far beyond the ideal 2%. He reckoned that the situation will persist for a ‘long period of time’ before inflation returns to the normal rate.

The minister added that the world is still experiencing effects in the supply chain after the pandemic, as well as the conflict in Ukraine.

He explained that the rising price of oil and an inflation rate which is ‘very far away’ from returning to its normally acceptable level, have had a number of effects worldwide, including Malta.

The current inflation rate is also the primary reason as to why international interest rates were set to remain high, and why economic growth across the EU is set to be relatively small, Caruana argued.

One must not forget that increases in commodity prices affect the Cost of Living Allowance (COLA) mechanism by which wage increases are pegged to inflation. This, in turn, causes a cost-of-living spiral - more so when rates of inflation are higher than the accepted 2%.

This happened after last year’s record COLA increase and it will happen again this year.

ABC in tourism studies

A two-page spread in the GWU’s l-orizzont the other week (September 8) was dedicated to the thoughts of economist Silvan Mifsud on the state of our tourism industry.

Silvan Mifsud is the son of Alfred Mifsud, former Deputy Governor of the Central Bank and recently appointed arbiter for financial services.

His message was that tourism causes stress on the infrastructure, thus affecting the quality of tourism services in Malta. He also pointed out that the foreign workers active in our tourism industry are a distraction from the Mediterranean experience that tourists coming to Malta would be looking for.

He even regaled readers with a basic ‘mathematical’ explanation that compared 10 tourists spending one euro each with five tourists spending two euros each. Mifsud explained that the second option would avoid stressing the country’s infrastructure unnecessarily.

This seemed to me a rather ‘kindergarten’ way of teaching tourism studies, but then, Silvan Mifsud is a better judge of the intellectual level of l-orizzont readers.

I wonder what the Tourism Minister thought about this piece. I waited some time before commenting on it, expecting a reaction from the minister Clayton Bartolo.

The minister ignored Mifsud’s contribution and kept on boasting how the numbers of tourists this year have kept on increasing.

The problem is that various administrations have been saying that Malta has to upgrade its tourism industry to attract more high spenders but the same authorities kept on pushing for numbers rather than for quality.

That this criticism of the state of our tourist industry had to be made in the GWU’s l-orizzont by a left-leaning economist speaks loudly about the laid-back attitude of the Opposition.

So, Clayton Bartolo goes on boasting about the ever-increasing number of tourists visiting Malta while criticism of the industry is only found in the GWU daily!

Lions and tigers

Almost three years ago the long-awaited rules on the keeping of wild animals in zoos were published in draft form by the Agriculture Ministry for public consultation.

Their objective was ‘to protect wild fauna and to conserve biodiversity by providing for the adoption of licensing, registration and inspection of zoos on the territory of Malta in order to strengthen the role of zoos in the conservation of biodiversity; to protect the health and wellbeing of animals and to protect the public from these animals.’

The regulations apply to animals found or intended to be kept in licensed zoos. They provide that no dangerous animal shall be exhibited in a zoo before it is registered in the Register of Dangerous Animals and the required written approval is given by the Director of Veterinary Services. No register of such animals has existed to date.

The few persons who seek to glorify their ego by possessing lions, tigers and exotic animals did not like this one bit. And therefore, nothing was actually done. The regulations remain just a proposal.

A week or so ago, Animal Liberation, an NGO, organised a protest outside the premises of Wildlife Park in Rabat about the fact that nothing has been done about regulating such ‘zoos’ in spite of ministerial promises. An activist even locked herself up in a cage to symbolise animals locked up in cages.

Animal Liberation insist that the public must understand that, although they are paying the price of an entrance ticket - or giving a donation - it is the animals that are paying the ultimate price as they are being kept in confined cages that are completely the opposite of their natural environment.

I do not agree with some of the reasoning of this NGO but I believe that Malta is too small to allow some 10 individuals to possess their own so-called ‘zoos’.

Yet another instance in which the authorities have bowed to the wills of a small minority at the expense of the majority.