Government exceeded debt targets for 2012 and 2013 - Labour

Labour spokesperson Karmenu Vella and Charles Mangion today held a press conference in reaction to Finance Minister Tonio Fenech's press conference on government's achievements in the last four years.

Vella said that the real indicator to measure government's financial and economic performance is total debt. He went to explain that by February 2012, national debt exceeded the debt targets set by the government for 2012 and 2013.

"While government had set Vella said that the target at €4,669 million for 2012 and €4,750 million for 2013, the debt already stood at €4,815 million in February," Vella said.

He added that this level of debt means that the country is paying €1.4 million every day in debt. Vella also pointed out that this debt does not include the debt of state entities such as Enemalta and the Special Purpose Vehicles set up to fund the City Gate project and to restructure the finances of Enemalta.

"The real problem lies in the fact that the rate at which debt is increasing exceeds the growth rate of the economy," he said. Vella also noted that the while the debt increased by 8.25% in 2011, the economy only grew by 2.1%.

Vella said although the Maastricht criteria demand that national debt does not exceed 60% of the Gross domestic Product (GDP), Malta's debt currently stands at 72% of GDP. The criteria also demand countries to keep the deficit below 3% of GDP.

While admitting that the deficit currently stands below the 3% target, Vella said "over the last five years the deficit has averaged at 3.3% of GDP." He explained that for this reason the European Commission had included Malta in the Excessive Deficit Procedure.

On the deficit, Vella explained that although Prime Minister Lawrence Gonzi had vowed to turn the deficit into a surplus of €60 million by 2010 in 2011 the deficit increased by almost €200m.

Charles Mangion, the Opposition's spokesman for the Economy said Tonio Fenech tried to "distort reality" in his press conference. He said the minister failed to mention a number of things including the situation at Enemalta and Air Malta, the warnings given by the European Commission, the International Monetary Fund and the political situation.

Mangion questioned the government's claims that 20,000 new jobs were created in the past four years. He said this figure is unrealistic as ETC statistics show that a little more than 4,000 full-time jobs and around 6,000 new part-time jobs were created. "This is a far cry from the 20,000 new jobs claimed by the government," Mangion said.

He said there were no new jobs created in the hotel industry and 900 jobs were lost in the manufacturing industry. Mangion explained that the government coffers can only be boosted by more direct investment.

Asked what plans the Opposition has to decrease the government expenditure, Mangion said the "government must have clear priorities" and mentioned the new Parliament building and the €35 million spent in consultancies as "bad priorities."

On the government's success is controlling the deficit below the 3% mark, Vella said it was a case of the government playing around with figures and recurring to creative accounting to give the impression that the deficit is under control.