Excessive deficit procedure for Malta would mean stringent financial maneuverability

Shadow finance minister Tonio Fenech told the House that the PN government had not embarked on a spending spree during the electoral campaign, after accusing the Labour government of having foregone €66 million in levies owed by Enemalta to the state, as the reason for a deficit earmarked at 3.3% of GDP.

Finance Minister Edward Scicluna yesterday said government's technical team found a recurrent expenditure of €120 million which hadn't been provisioned for in earlier estimates, and a separate €26 million net increase in ministries' spending.

Scicluna said this year's deficit would be of 2.7%, prompting Fenech to insist that this budget did not address such a high deficit but provided for a 1.7% deficit by year-end.

The government and opposition are at loggerheads over the €66 million in fuel levies Enemalta owes the state, with the Opposition adamant that this money should have been included in the government's accrued accounts.

It argued that the figure amounted to 1% of the gross domestic product, resulting in the deficit increase from the PN administration's estimate of 2.3% to government's 3.3%.

"I am well aware that when ministries find shortfalls, they try and fill in those holes," Fenech said today. "It however appears that the government accepted them as they came. Probably, because this has provided it with a cushion. I only hope that Malta will not have to pay a price for that," he said.

The Maastricht Treaty binds EU member states to a deficit of below 3%. If surpassed, the member state can enter the excessive deficit procedure, forcing countries to cut down and control their spending.

"The EDP would mean stringent financial maneuverability," Fenech said, reiterating that the figures he left would have resulted in a 2.5% deficit, not surpassing 2.7%.

Referring to the presentation of the budget as presented by the PN administration, Fenech added that this also meant that the previous government had found a solid country with stable finances.

He also commented that it was "surreal" for him to speak about the Budget from the Opposition benches, having he been the one to present it in December.

Fenech added he was disappointed that the Prime Minister's speech yesterday evening and the President's speech from the throne had failed to explain government's strategy to reduce debt while bolstering the economy.

According to the financial estimates, debt is projected to grow by €600 million from last year's €4.9 billion to €5.5 billion in 2015. According to government, it would be taking a cautious approach in reducing deficit while slowing down the rate of debt acceleration.

But according to Fenech, at this rate, government funds will not be consolidated. "If on an international level Malta is not perceived as fighting for a strong financial stability, all that we built and invested can be lost," he said.

He added that €6 million of the €10 million government expenditure were going towards financing the Prime Minister's large Cabinet.