Finance ministry says Opposition ‘does not understand economy’

Reacting to the Opposition’s press conference earlier yesterday, the finance ministry said that claims made were a reflection of their “panic and contempt” toward the positive economic and financial results being achieved.

“Over the last couple of years, more than 12,000 jobs were created, there was economic growth, exports increased and investments were fostered. The Opposition, in contrast, suggested that Malta is following the path of countries which today are in dismal financial situations,” the ministry said in a statement.

The ministry said that the government’s objective over the last five years was always focused on financial sustainability and the creation of employment opportunities.

“In 2009, the government chose to intervene and save 5000 jobs even though this meant an increase in deficit. The government directly intervened with factories, increased the MTA budgets to attract more tourists and increased incentives for business owners to ensure that local business was a new source of wealth and employment creation. It was this which resulted in more than 5,000 jobs being saved, that economic growth exceeded the EU average and unemployment is now the fifth lowest within the EU itself,” the ministry claimed.

The government should be an incentive and catalyst for economical activity in times of crisis and according to the ministry, the Opposition seems unable to understand how the economy works.

“Having invested more because of the crisis, our country has once again resumed the path of financial sustainability, by curbing public expenditure and increased efficiency and, thanks to economic activity and jobs created, increased government revenue. This resulted in a less than 3% deficit for this year. Our country’s debt is less than the European average but the government is committed to lessening this. This has been reflected in the Budget 2012,” the ministry claimed.

Regarding EU funds, the ministry said that the Opposition does not understand how the system works and explained that for all the funds to be used, financial estimates need to be made at the beginning of project implementation.

“Many projects co-financed by the EU are extensive projects which will be completed in coming years. Malta has one of the best rates of European fund absorption in the whole of the EU. This was confirmed several times by the European commissioners. The EU certified that Malta took all the funds allocated in the first EU budget for 2004 and 2006,” the ministry asserted.

The finance ministry said that because the Opposition attempted to link recurrent expenditure with capital expenditure, there was a clear demonstration that the Opposition “does not even know how the budget works”.

“Our country’s financial situation was placed on sound footing thanks to careful and serious work. This led to the government, which will continue to reduce public expenditure where this is not essential being able to further ease tax burdens, while maintaining capital, social and educational expenditure,” the ministry said.

According to the ministry, 55,000 persons will benefit from the tax reform involving the second income tax reduction performed during this legislature since the first budget.

 “But the fact that the Opposition continues to deny that there is an ongoing economic crisis around us is the best proof of their total separation from reality. Maybe this explains why there is a total and absolute lack of stance or form of policy apart from promising everything to everyone,” the ministry said.

Making reference to a televised programme aired three days before the Budget was revealed, the ministry said that Labour spokesman Karmenu Vella said that the government should not reduce income tax.

“Today, the same person argued that the electoral pledge needs to be performed, whatever the situation, even if this goes against the country’s interests,” the ministry said.