Labour – ‘Gonzi in hiding’ after Moody’s downgrade

Labour has said the prime minister has “gone into hiding” after accusing him of hiding the real state of the economy, 48 hours since the credit rating agency Moody’s downgraded Malta’s bond ratings to A2 from A1 and a revision of outlook to negative.

“The highest ever paid Maltese prime minister has not said one word about this certificate of failure,” the PL said in a statement.

“Any other responsible prime minister would have reassured families, businesses and markets. But Lawrence Gonzi chose to go into hiding instead.”

Labour says Moody’s downgrade was a certificate of failure “matching that which families and businesses awarded the Gonzi administration, after three years of feeling the pinch of Gonzi’s austerity measures.”

Yesterday Opposition leader Joseph Muscat said the government had to come out of its state of denial on the real state of the economy. “It is not in our interest to be critical at this stage, but our duty to call on the Prime Minister and his government to be honest about the economic situation,” Muscat said.

“The writing has been on the wall for the past seven years but the prime minister chose to engage in absurd priorities that have set the government’s finances back.”

Finance Minister Tonio Fenech said Malta’s country ceilings for bonds and bank deposits were unaffected by the rating action and remain at Aaa, in line with the euro area’s ceilings.

Fenech said Moody’s acknowledged the limited impact on the Maltese economy of the 2008/9 financial crises. He said government had assisted manufacturing companies facing drops in demand, improved the tourism product and postponed deficit reduction targets, saving over 5,000 jobs.

“Malta has managed to continue to sustain above-EU average growth rates and significantly lower levels of unemployment when compared to our EU partners, because of the various structural reforms that continue to be implemented and the incentives we have given to small business and industry to sustain economic growth.

“It would be highly imprudent to steer government’s economic and financial management policy away from its current emphasis on continued macroeconomic stability and economic growth,” the finance minister said.

The Malta Employers’ Association called attention to Malta’s downgraded credit rating over the island’s weak debt position and the cutting of its deficit using one-off measures.

“It’s an eye-opener to government to focus on reducing the deficit and to facilitate a more competitive economy,” the MEA said.

“Moody’s seem to be telling Malta that we need to be more strategic in the manner we manage finances. The downgrading has also been influenced by the poor performance and instability of many Eurozone economies, which have generally experienced lower than expected economic growth.”

Alternattiva Demokratika chairperson Michael Briguglio has said Malta should stop being over-dependent on unsustainable real-estate and on sectors that are based on speculation, in a reaction to the downgrading of Malta's credit rating to A2 by Moody’s.

He added that AD supported taxing property speculation from third vacant properties onwards. “Increased investment in green jobs and discouragement of wasteful energy use are also important for a sustainable economy,” Briguglio said.