Budget aimed at making work pay

The 2014 Budget includes around 250 measures, which finance minister Edward Scicluna described as a “blitz” aimed at achieving the first phase of the government’s programme.

The budget speech was dominated by the "making work pay" theme and the finance minister emphasised the government's aim to attract unemployed persons to the labour market through the introduction of a number of measures incentivising employment.  

In his budget speech, Scicluna explained that the government had set six priorities in its first fully-fledged budget, which he said went beyond a simple "accounting exercise."

"The government's first priority is to ensure that the government's expenditure reflects its means," Scicluna said, adding that if the country spends beyond its means it would be irresponsible.

The other priorities at the top of the government's agenda are a reduction in the energy expenditure, economic growth, projected at a "conservative" 1.7% rate and a reduction in bureaucracy.

The government is also prioritising the sustainability of social services, including health, education and pensions while diversifying the services and manufacturing sectors.

"We are doing this in the belief that the government is responsible for creating an economic environment and regulation which allows the private sector to and investors flourish. We believe that the private sector is the economy's key motor."

He added that the government was aiming at improving the country's quality of life and create "a stronger and more just Malta."

Scicluna noted that although the international economy was showing signs of recovery, "instability was not over yet."

Highlighting the high level of unemployment in the EU, Scicluna said that Malta had registered the biggest increase in employment within the EU28 in the second quarter of 2013.

He also underlined the government's success in controlling inflation which shrinked from 2.9% in September 2012 to 0.6% in the same month this year. These achievements, together with the rate of economic growth and the stable flows of revenue and expenditure strengthened the government's belief that it would reduce the deficit to 2.7% of GDP by the end of this year. 

The projected growth of 1.7% although above the EU average, was a conservative estimate, Scicluna said.

"Despite being optimistic that growth will exceed this forecast, we were prudent," Scicluna said, adding that the government's forecast was below that predicted by international agencies.

The government revenue for 2013 is expected to reach €3.05 billion, with the expenditure standing at €3.23 billion. The deficit is set to be €191.3 million, Scicluna said.

This would mean that the deficit is below the 3% target set by the EU. Moreover the government is projecting that this would be further reduced from 2.7% to 2.1% by the end of next year.

The minister added that the government is aiming at reducing the budget by around €40 million to €151.7 million.