PN’s economic forecasts ‘unrealistic’ - Labour

Labour shed doubt on the PN's electoral programme costings and challenged finance minister Tonio Fenech to explain how a PN government would fund an average of €120 million in extra expenditure every year.

Speaking just hours after the PN's press conference in which Tonio Fenech announced the costings of the party's 125-point electoral programme, Labour MP slammed the minister's credibility and asked "where will the €120 million come from?"

"Would the government make up for it by reducing the expenditure in education, health and pensions?" Vella added.

He pointed out that Tonio Fenech "excels in making over-optimistic projections which always end up in failure."

Vella also cast doubt on Fenech's credibility, underlining the number of time the Nationalist government was included in the EU's excessive deficit procedure and the warnings issued by credit rating agencies which highlighted a number of shortcomings in the government's economic management.

Vella added that since taking helm at the finance ministry, Fenech failed to achieve deficit targets he set himself and asked "What credibility do you have if you contradicted Prime Minister Lawrence Gonzi and PN deputy leader Simon Busuttil who said that a balanced budget would be achieved by 2015 and not 2016 as Fenech claimed.

MEP Edward Scicluna noted that the PN was aiming at achieving a budget surplus by 2016 and reduce debt to 60% of GDP by 2017 despite the PN electoral pledges would cost the country €120 million.

He added that the PN was making promises which would increase recurrent expenditure by €120 million annually which would be covered by improved efficiencies. Scicluna noted that the PN projections show that recurrent expenditure projections remain unchanged from the projections he had made in the Budget.

Rubbishing Fenech's claims that a balanced budget would be achieved by 2016, Scicluna said the implantation of the PN electoral programme would lead to a 1.5% increase in Malta's deficit if the projected efficiencies were not achieved.

"Fenech's costing exercise is based on over-optimistic projections. The minister needs to answer how these targets would be achieved. Where will the funds come from?"

The MEP said that the PN's costings are based on assumptions on increasing efficiency, reducing government expenditure and raking in more money by controlling tax evasion.

"What this means is that the €120 million extra expenditure needs to be balanced by €120 million in efficiencies. Would this mean more taxes?"

He also noted that a number of PN proposals would be absorbed by the projected capital expenditure. 

Although both Labour exponents described the PN government's projections for 2013 over-optimistic, Scicluna said that a new Labour government would maintain the 2013 budget "on the understanding that the budget fundamentals were approved by the EU commission. If this is not the case then we would need to make amends."

Asked whether a new Labour government would also aim at achieving a balanced budget, Vella would not commit himself but said that Labour would be more efficient in its spending than the current administration.

On his part, Scicluna added that it would be an achievement for a Labour government if would manage to arrest the growth of government debt, which spiralled out of control under the Nationalist government.