Labour says government's picture of economy 'misleading', Fenech: 'PL detached from reality'

Labour's main spokespersons for finance and the economy poured cold water on the figures bandied about by the government on Malta's economic performance, a day after the worrisome analysis by the International Monetary Fund.

Karmenu Vella said the central government debt at the end of November was €50 million higher than the government had projected, while the deficit for the first nine months of last year was 4.1% when the government had projected 3% by the end of the year.

Vella said the government would have needed a surplus of €14 million to achieve its aims, but on surplus was ever registered. "Government's projections have gone wrong," Vella said.

He also said government's projection of a 2.2% growth was contradicted by IMF projections that a more realistic figure would be 1%. "Total investment has decreased by 14% placing Malta third from last in eurostat rankings, while yesterday we registered a 65% decrease in foreign direct investment," Vella said.

He added that Malta's 57% employment rate was lower than the EU's average rate of 64% and that Malta's per capita income had decreased by 2.1% while the eurozone average had increased by 2.5%.

"The devil's in the detail," Charles Mangion said. "How will the €40 million cut affect the economy? Looking at Malta's exports, contrary to what was announced we have seen is a 1% decrease according to eurostat, and not a 5% increase in exports."

Mangion also said purchasing power in Malta was on average €18,000, compared to the EU's €20,000 and inflation had gone up by 20% since 2003 compared to the EU average of 16%.

In a reaction, Finance Minister Tonio Fenech said the two MPs displayed "an impressive detachment from reality" and did not yet grasp the way the world economy works.

"Vella and Mangion have compared the growth forecast issued this week by the International Monetary Fund with government's own growth forecast for 2012 made in November 2011, more than two months ago," Fenech said.

"The IMF has come up with lower forecasts on the basis of developments which have taken place over the past weeks which have unfortunately seen a rapid deterioration of the European economy as highlighted in reports presented by the IMF and Standard and Poor's lately. This is precisely what Government has been warning about - a fact which Labour deems convenient to ignore."

Fenech said comparing end-of-year projections for financial results, with figures for the first nine months was not a fair comparison.

"The Opposition should know better that significant revenue streams, particularly government's tax revenue, take place towards the end of the year. So the economic and financial arguments brought about by the Opposition can only be explained either as an effort to confuse people or else a very worrying exercise."

Fenech said a recently published European Commission report stated that Malta was amongst a limited pool of countries to experience job increases in the crisis period. Malta has currently the fifth lowest unemployment rate in the European Union.