Labour demands explanation for budgetary cuts

Addressing a press conference this afternoon, Labour MPs Karmenu Vella and Charles Mangion together with MEP Edward Scicluna demanded that the government explained where cuts will be made in detail since government refused to give out such details in parliament. 

Vella said that apart from the €40 million cuts, the government will absorb the €25 million debt for Enemalta and noted that the European Commission had included Malta on a list of five countries in the excessive deficit procedure.

He said that the EU commission had announced that the sanctions will be lifted in March if government reaches its deficit targets. "Finance Minister Tonio Fenech was quoted as saying that the cuts will only come into force if the government reaches its mid year targets in June. However, the finance ministry has already issued instructions to governmental department and ministries to introduce budgetary cuts," Vella said.

Vella added that the finance minister almost "appears incapable" of carrying out these cuts.  He asked whether the government had actually cut €40 million or if it was hiding this figure through creative accounting.

The former tourism manager added that the government is resorting to special purpose vehicles to take over government debt and hide it. Vella said this is being done by cashing future income to pay existing expenditures, such as the City Gate project.

Vella underlined the discrepancies which exist between the announced budgetary capital expenditure and revenue figures and the revised and actual expenditures. He added that this must also be seen in the context of inflated revenue estimates. "This year revenue was supposed to be €300 million higher than that revised for last year. Where will this money come from?"

On his part, Labour MP Charles Mangion said that the government should announce and discuss in detail any budgetary adjustments, as is normally done with the budget itself.

Mangion said the government was either incompetent or deceptive when it came up with its forecasts figures for growth and budgetary estimates for this year.

He added that the current finance minister will be best remembered for the failure of two key players in the Maltese economy, Enemalta and Air Malta.

MEP Edward Scicluna said he has posed a parliamentary question asking European Commissioner Olly  Rehn to explain whether it was the EU commission who imposed the €40 million cuts on the government or whether the government itself proposed the cuts. He said the commissioner should reply within the next three weeks.

On the cuts announced by the government in health, education and social policy, Scicluna said "It is shocking to hear that the cuts have affected the most vulnerable persons in society."

Scicluna also noted that in the last quarter of 2011, Malta registered negative economic growth. Should the same thing repeat itself in the first quarter of this year, Malta will officially enter into recession. "In light of introducing the golden rule which will oblige eurozone countries to respect budgetary rules, government must stop using creative accounting to hide its debt."