Fitch warning not to be underestimated, Greens say

Alternattiva Demokratika has warned the government not to underestimate the warning issued by credit rating agency Fitch and its downgrade of Malta's credit rating.

AD chairman Arnold Cassola said the downgrade from A plus to A confirms the Greens' concerns on Maltese economy.

The agency is stressing that the Government is focusing on revenue growth without embarking on concrete measures to reduce its expenditure, AD said. Of bigger concern, it added, is the reduction in income tax which further creates a hole in government finances.

"It is doubtful whether the Government deficit can be lowered to 3% of GDP by the end of this year," Cassola said. "The Pre-Budget document clearly shows that domestic expenditure has declined resulting in loss in revenue from customs/excise duties, licenses, taxes and VAT."

Cassola said it was of great concern that Malta's total public debt, including Enemalta and Government guarantees, amounted to a staggering 90% of GDP, in line with Spain, France and UK.

"Both the former and current administration have a habit of quoting to total public debt at 74% of GDP, excluding Enemalta. This is merely playing around with figures and is not realistic," Cassola said.

"Forging ahead with an expansionary budget, after the former Nationalist administration had failed to respond to the fiscal deterioration of 2012, could cause greater problems to the state of Maltese finances."