[WATCH] Government spending review not a blanket cut in funding, economy minister says

Economy Minister Silvio Schembri says government spending review is an exercise in being more careful where to invest funds

Economy Minister Silvio Schembri
Economy Minister Silvio Schembri

Silvio Schembri has played down concerns that government’s decision to postpone infrastructural investment could send the economy into a recession.

The Economy Minister insisted on Monday that government’s expenditure review is “not a blanket cut in funding”.

“The exercise is to postpone any expenditure that can be postponed to another time but this is definitely not a cut on investment… the Finance Minister has not asked me to cut expenditure on investment,” Schembri said.

The cuts are made necessary by government’s substantial spending on electricity and fuel subsidies to keep prices stable. But given the size of government’s spending in the economy, the decision to apply the brakes may cause a slowdown in activity and possibly a recession.

Schembri said that projects involving EU funding are not impacted by the review exercise.

However, he was unwilling to quantify the size of the expenditure cut the Finance Minister is calling for.

“It is not a question of size… it is a question of being more careful where to invest funds, especially in light of the millions being spent to subsidise the cost of energy for families and businesses,” Schembri said.

He added that the subsidies were enabling Maltese businesses to be competitive despite rising international prices of energy.

MaltaToday revealed in July that Finance Minister Clyde Caruana asked all ministers to identify spending cuts to the tune of €200 million from this year’s budget as the cost to keep energy and fuel prices stable continued to soar.

The cuts included a €1.1 million trim in the University of Malta’s budget but little else is known so far as to the impact of the cuts.

The Sunday Times of Malta yesterday reported that government is likely to postpone investment in large infrastructural projects wholly financed by it, citing as an example the new tourism school campus at Smart City.

Caruana has been largely absent on the issue with his only comment coming late last month when he confirmed that €100 million in expenditure cuts had been identified. Further expenditure cuts were in the process of being identified, he added, without elaborating.

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