Gonzi categorical: S&P downgrade result of Opposition’s vote against budget

Prime Minister Lawrence Gonzi remains convinced that a downgrade by credit rating agency Standard & Poor's of Malta's long-term sovereign credit rating to BBB+ was the Opposition's fault after it voted against the budget for 2013.

In its general overview, S&P indeed refers to the failure of a 2013 budget being adopted, however it also specifies in its rationale that the growing government debt and liabilities from loss-making companies like Enemalta are the cause of the downgrade.

But Gonzi insisted that the downgrade, motivated by a rise of €300 million in Enemalta debt in the past three years and a doubling of the deficit since 2008, was down to Labour's decision not to approve the budget.

"Standard & Poor's certificate is categorical: our country was downgraded because the Budget was not approved in parliament," he said, adding that to the credit rating agency this had meant "a certain instability had been created".

Gonzi merely referred to S&P's mention of Enemalta, described as an "ailing energy utility", as "something that could cast some doubt".

The Prime Minister said he didn't expect the Opposition to vote in favour of the budget, but that he was surprised that it voted against when Labour leader Joseph Muscat was expected to implement it.

When pressed over the fact that the budget vote fell through because of a member of his own parliamentary group - Franco Debono - voted against, Gonzi said: "everyone knew what the reality was".

"I was always clear that whether the budget was approved or not, I would call elections early in 2013... it was time for elections anyway," Gonzi said.

Once again, the Prime Minister put the onus on Muscat who, according to Gonzi, could have voted in favour of the budget "in the national interest and then choose to vote against the ministerial budgets on ministers' salaries to show a vote of no confidence.

"Never in Maltese history have we heard of a leader of the Opposition who says he will implement the government's budget if elected. So can someone explain what's the logic in voting against something you agree with?"

"It was obvious that Muscat wasn't seeing the national interest but the interest of his party".

Taking the political situation in Italy as an example, Gonzi said that despite the disagreement between coalition parties, they had still approved the budget in the national interest before heading in for elections.

Gonzi also asked that the national debt "be seen in perspective", mentioning the case of countries with higher debt levels than Malta's. "But the question to ask is how was that debt generated? In our case, it was through capital projects to improve the University of Malta and the investment in the Delimara power station. Let's not forget that in 2001 and 2003 government had to absorb the debt of the Malta Drydocks when the European Union agreed to our restructuring programme."

"I don't want to blame Labour for that debt, but they still had 16 years to manage a dockyard that was then bankrupt and draining the country's coffers".

The Prime Minister said his government was aiming that by 2015 a balanced budget would be reached, so that national debt could start be addressed and taken down to below 60% of GDP.