Prime Minister reiterates confidence in achieving 2.7% deficit target

Joseph Muscat says European Commission ‘used to’ previous Nationalist governments ‘not keeping their word’.

Deputy prime minister Louis Grech (left) with Joseph Muscat
Deputy prime minister Louis Grech (left) with Joseph Muscat

The government is confident it will reach its self-imposed deficit target of 2.7% by end of year, despite a European Commission autumn forecast of a rise to 3.4% of GDP.

Addressing the press in the first of a series of press conferences to be organised on Budget 2014, Prime Minister Joseph Muscat argued that the European Commission was used to dealing with a government that "did not up live up to expectations".

"I believe that discussions with the European Commission will be positive, with Brussels realising we are a government which implements what it promises," Muscat said, whose government yesterday presented its first budget.

Asked about the substantial difference in Malta's and Brussel's deficit projections, the Prime Minister argued that the European Commission had so far been sceptical on Malta's success in reaching targets "based on previous perception".

"But the arguments we are putting forward are changing that perception," he said, adding that even the "conservative" stance adopted by the government had sent a strong message to Brussels.

According to Brussels's autumn forecast, Malta is expected to enjoy a 1.9% economic growth whereas government announced a conservative 1.2% growth in 2013.

Muscat noted that while the Opposition was hitting out at the government on lack of job creation policies, the European Commission was forecasting a 1.8% increase in employment.

The Prime Minister took the occasion to fend off some of the criticism raised by the Oppostion, describing the alleged €400 tax burden increase per capita as a "gross mistake".

"Simon Busuttil's argument is simplistic... He simply divided the income from taxes by 400,000 population and reached his own conclusions. By that argument, the previous administration had imposed a €557 tax burden on every person," Muscat said.

He argued Busuttil's calculations had included taxes to be paid by banks, financial services providers and gaming companies.

He denied that the government had cut the ministries' budget by €25 million but said the money had been reallocated. On the Opposition's argument that debt would increase by half a million, Muscat said this had been old debt which had to be rolled over.

According to deputy prime minister Louis Grech, the €21.4 million increase in indirect taxes would in reality result in €55 per capita.

'Ready to restart IIP discussions but Opposition is incoherent'

The Prime Minister said the government was ready to restart discussions on the citizenship scheme with the Opposition but at the same time he failed to understand the PN's arguments.

"At one point they say they agree with the scheme and the next they oppose it. Simon Busuttil wants a discussion even though he disagrees with it. How can we discuss?" 

Muscat insisted the Opposition was being "extremely childish" in its attitude now that all Nationalist MPs want to take part on the debate. 

The Prime Minister alleged that the Opposition had an interest in delaying the implementation of the citizenship scheme.

Nationalist MP Francis Zammit Dimech's legal firm represented Arton Capital Inc in the tender bid to become the exclusive concessionaire for the IIP. "Is the Opposition buying time so that the scheme could be adopted by other countries before us?" Muscat said.

The government has already suggested that foreign firms involved in such schemes abroad stood to lose once the scheme is introduced in Malta, taking away investment from other countries.

"A Nationalist MP has joined a foreign company in applying for the scheme," Muscat said, refuting to mention the MP by name when pressed by journalists.

He also refused to accept the term "selling of passports" repeatedly referring to it as "citizenship by investment".