Four hours more
In less than four hours 2001 will be history and 2002 will be a current reality. Will it make any difference`
It will at least on two counts.
The Euro will become a tangible reality in the lives of the people of 12 EU members who have been using their national currencies in fixed parity with the Euro for three years.` This will be no earth-shaking innovation. The Euro has existed in the finance world for over three years and though it lost a lot of value against other major currencies it is considered as the second main international and reserve currency. Its loss of value is very much a reflection of the state of an economy struggling to consolidate its core whilst preparing to enlarge by the prospected inclusion of the less prosperous eastern countries that would eventually be expected to join the Euro monetary system.
Yet is will bring an existent reality closer to the daily lives of` some 250 million people as they use hard Euro notes and coin for their everyday purchases and as they start losing touch with the notes and coins of their hitherto national currency.
As Malta is not part of the Euro monetary system and is not expected so to be for at least another four years even if Malta were to join the EU in 2004, this could all have rather tangential interest for us.` Basically tourists will be bringing in their Euro notes and coins rather than their marks, their lire, their francs, pesetas, escudos, drachmas, schillings or what have you.` For our foreign exchange dealers this will be simplification rather than complication.
But it does not end there. It is time to ask whether the current basket of the Maltese lira is serving us well. I have said it many times and I repeat it again.` It is not! Malta must export before we can import and as are largely dependent on Euro countries and Britain for the value added of our exports it is time to consider either a fixed link with the Euro or a basket composed solely of Euro and Pound Sterling.
And there is great difference between` having a domestic currency in a fixed link with the Euro on one hand and` forming part of the Euro monetary system` on the other hand. In case of the former the fixed link is an internal decision which could be undone at our own choice if circumstances so dictate.` Forming part of the Euro monetary union means entering into a permanent arrangement where the domestic currency will be replaced by the Euro so that the flexibility of using the rate of exchange and monetary policies` as a tool of economic management is lost for forever and one is left simply with fiscal policy to fine tune the economy. Ask Argentina how difficult this could be at times of serious economic imbalances!
But what else will be different after next midnight. We would be able to say that this will be the last full year of a fatigued administration that lost control over economic management of the country and is only seeing wholesale privatisation as a means to buy some more time before being forced to address the consequence of their 15 year economic nonchalance.`
Nationalists, middle of the roaders and labourites largely agree on this analysis. Where they fall apart is whether Labour is in fact offering better and real solutions. On this score labour will have to do better in the run up to the next elections.
Monday, 31 December 2001
Sunday, 30 December 2001
The Malta Independent on Sunday Lessons from Argentina
The unthinkable has happened. Argentina has exploded ` politically and economically.` Devaluation of the peso is now a foregone conclusion even though attempts to create a parallel third currency will try to camouflage it and cushion its social consequences. Default on its USD 155 billion foreign debt has been announced and applauded by the citizens who were being squeezed dry` with pay and social security cuts to enable the country to continue servicing its foreign debt.
I had warned in various contributions I wrote earlier this year that this explosion seemed unavoidable. I had expressed concern at the high level of exposure which Maltese investors, especially those dependant of fixed income with a rather low risk tolerance profile, had on emerging market sovereign debt in general and Argentina in particular.
Many considered my contribution alarmist. The authorities did not move until it was too late when the MFSC issued a statement warning investors to beware Argentina`s sovereign debt as highly risky. Many Maltese unsophisticated investors are now crying for Argentina with not much they can do but wait for new developments.
Yet the lesson for us should go deeper than that. Argentina`s economy was brought to a state of misery due in particular to two principal factors. Firstly it tried to defend` a totally uncompetitive rate of exchange regime which rendered the country uncompetitive in foreign markets and forced the economy to endure a four year long recession.
Exchange rate stability is a virtue which needs preservation and active re-enforcement when the economy is growing at a normal rate.` It is like a balanced diet for a healthy person. But when the person gets sick the balanced diet is no cure. Timely and correctly dosed medicine is the only thing that can restore health. And when a country loses its competitiveness a fixed rate of exchange policy could be a noose round the neck. Instead of medicine correctly dosed at the right time sick Argentina continued to be fed a balanced diet suitable for an Olympic form athlete. The result is further loss in competitiveness, further economic contraction, widening budget deficits and horrendous amassing of foreign debt at high rates to justify the lender`s risk premium.
Drawing this in a local context it makes no sense whatsoever for the government and the monetary authorities to rule out that devaluation of the local currency could be part of the cure needed by our sick contracting economy. Granted, devaluation on its own offers no long term solution.` But as a part of a total re-structuring plan it could well be an indispensable part of` the therapy treatment. Unless, that is,` we prefer the Argentina route allowing the economy to contract and the national` debt to rise whilst waiting for solutions from heaven.
The second lesson from Argentina is that a country cannot keep borrowing for ever at a rate much faster than its economic growth. We have been doing this for 15 years. Our national debt exploded from near zero to 62% of the GDP in less than 15 years` with speed gaining momentum since 1996 when the annual public deficit reached high percentage of the GDP. Add to this another Lm400 million odd of public debt still unrecognised as such, but still very much so ( in the Treasury Clearance Fund and dead bank loans guaranteed and serviced by the government) and the percentage of national debt to the GDP shoots up to close to 90% which makes Argentina`s debt at 55% of the GDP look healthy.
The obvious question pops up. Why did Argentina`s debt become unsustainable whereas Malta continues to sustain and amass the debt with no comparable consequences` The answer is in the way the debt is structured.` Whilst Argentina`s debt is mostly in foreign currency at high rates of interest and with short maturity profile necessitating active roll-over management of the debt,` our national debt is mostly internal denominated in Maltese liri at a rather low rate of interest and with a comfortable spread giving it a long term profile.
For as long as local investors keep their faith in the local financial system which keeps feeding savings to fund the national debt Argentina`s consequences will be averted. But if the economy keeps contracting, government keeps coming back for more and the international investment scenario recovers from the grim scenario it fell throughout 2001 there could well come the time when local investors prefer to invest externally forcing the government to seek external financing.` That could signal a very serious twist to the national debt problem.
I put it across to my readers.` Are we building an Argentine model of disaster with a rigid rate of exchange model forced upon an uncompetitive and contracting economy that keeps amassing its national debt at an alarming speed as the increased taxation extracted is frittered away on recurrent expenditure including the heavier burden of servicing the ballooning debt` Argentina`s lessons underline the timeliness necessary for administering the right solutions. We have been playing around with a public sector debt in unsustainable high figures since 1996 and 2002 will be the 7th consecutive year of such problems. Some stitch in time!` May the Lord spare us an Argentina.
Il-Kullhadd Milied bla paci fl-Argentina
F`dawn il-jiem imqadssa tal-Milied u tmiem tas-sena lkoll naghmlu sforz, min genwin u min falz, biex inharsu lejn il-pozittiv tal-hajja. Biex nifirhu b`li ghanda u biex inqawwu qalbna u nixtiequ lil xulxin futur ahjar.
In-nies ta` l-Argentina` din is-sena kellhom Milied mill-aktar mizeru.` Il-pajjiz ghaddej minn inkwiet ekonomiku kbir. Imkwiet li gieghel lil gvern jiehu mizuri t` awsterita` tnt iebsa li qajjem rivoluzzjoni fil-pajjiz. Il-President u l-gvern kellhom jirrezenjaw. 27 persuna tilfu hajjithom fl-irvellijiet. Il-gvern il-gdid kellu bilfors jiddikjara li mhux ser jonora id-dejn kbir li l-pajjiz ghandu ma investituri barranin.
Normalment il-pajjiz kien jaqbad u jizvaluta l-munita tieghu, il-peso. Izda tant hemm dejn barrani kemm tal-gvern kif ukoll tan-nies privati li sselfu f` muniti barranin biex xtraw darhom, li zvalutazzjoni twassal ghal ugiegh kbir lil dawk li lanqas jahtu ` il-haddiema. Minflok holqu munita gdida biex jizvalutaw ghal kummerc kurrenti bla ma jizvulataw ghal obbligi ga ezistenti.` Kemm dan se jzomm u jtul dan l-arrangament` difficli tkun taf izda mil-bidu jidher arrangament zlugat.
Tghiduli izda ghalfejn qed tkellimna fuq id-dwejjaq ta` l-Argentina flok fuq il-ferh aktar addattat ghal dawn il-jiem ta` festi. Semplici. Ghax min bhali tassew jixtieq il-gid lil pajjizna ma jistax jistahba wara xejxi artificjali biex ma jigbidx taghlima li tiskansa ghawg li qed jistenna lil pajjizna jekk ma nibdlux ir-rotta illum qabel ghada.
Il-gwaj huwa li meta jigi l-ghawg l-aktar li jbatu mhux dawk li jkollhom htija li wasslu lil pajjiz ghar-rovina minhabba tmexxija hazina. L-aktar li jbatu jkunu il-haddiema, in-nies tal-klassi l-baxxa, il-pensjonanti u dawk li ma ghadhom l-ebda htija ghal gwaj li jkun wasal.` Mhux sewwa dan izda dik hi r-rejalta.
Jien perzwas li l-istorja ghad tikkundanna lil Fenech Adami bhala l-aktar Prim Ministru irresponsabbli li qatt kellha Malta. Biex isostni l-popolarita tieghu kkreja problemi finanzjarji kbar ghal pajjiz li issa ma ghandhomx soluzzjonijiet facli jew bla tbatija. Minn pajjiz bla dejn xejn u mghoni b`hafna assi li jrendu,` Fenech Adami fi hmistax il-sena rrenda lil pajjiz midjun sa xfar ghajnejh, l-assi jew inbieghu jew qed jinbieghu biex semplicment nsoddu xi toqba `l hawn` jew `l hemm , u issa bil-pajjiz gharkubbtejh ma qed jara l-ebda soluzzjoni hlief neo kolonjalizmu halli nergghu litteralment immoru lura ghas-snin sittin.
Jekk ma ndawwrux ir-rotta, meta nkunu bghena kollox, meta ma nkunux nistghu nisselfu aktar,` x`ser naghmlu. Ser naghmlu bhal ma kellu jaghmel l-ex President Argentin De La Rua u jaqbad u jnaqqas il-pagi u l-pensjonijiet ta` l-aktar nies bla htija fis-socjeta Jew jahseb li ser tigi l-UE u taghtina l-flus biex nibqghu ghaddejjin bil-hela`
Il-messagg tieghi ghas-sena d-diehla huwa car u semplici. Is-soluzzjonijiet li ghandu bzonn il-pajjiz la jista` jaghtihom dal-gvern li wassalna ghar-rovina li qeghdin fiha u wisq anqas ser toffrihomlna fuq xi platt tal-fidda l-UE. Il-soluzzjonijiet tal-problemi taghna irridu nsibuhom ahna l-Maltin u l-Ghawdxin stess bis-sahha kbira li dal-gens ghandu fih innifsu.
Dan il-pajjiz ghandu bzonn tmexxija gdida. Tmexxija li temmen fil-hila tal-Maltin, li ghandha fiducja li l-Maltin kapaci jifhmu il-problemi kbar li fih it-testment politiku` li se thalli l-amministrazzjoni ta Fenech` Adami. U li la jifhmu dawn il-problemi jinghaqdu biex insibu soluzzjonijiet veri u prattici fejn kulhadd igorr skond kemm jiflah u mhux il-piz kollu jaqa` fuq iz-zghir bhal ma qed jigri fl-Argentina.
Tmexxija li jista` jaghtiha biss gvern gdid immexxi mil-Partit Laburista li jien ser nahdem biex inkun parti minnu.
Il-pajjiz mhux biss hela sena ohra izda kompla ghodos `l isfel fil-problemi ekonomici kbar li se jhallu Fenech Adami u l-kumpanija tieghu. Zmien mohli ta` hela ta flus u sparpaljar ta` rizorsi. Is-sena d-diehla` taf tkun sena ohra ta` ghajb u ta` ghawg. Aktar ma jtul dan iz-zmien aktar is-soluzzjoni vera tal-problemi tal-pajjiz issir difficli.
F`dan il-kuntest huwa car kemm il-pajjiz qed jinqasam bla htiegha fuq l-issue ta` l-Unjoni Ewropeja li l-gvern qed juza biex jaljena l-poplu mill-problemi veru li ghandu l-pajjiz.` Il-prijorita tal-pajjiz mhux l-UE li fuq kollox ghadha hi stess qed tinbidel u ma nafux x`forma ha jkollha meta xi darba nigu biex joffrulna li nidhlu.` Il-prijoriota` hija li niehdu mizuri fuq pjan nazzjonali ta ristrutturizazzjoni biex nevitaw ghawg stil Argentin fuq pajjizna. U dawn il-mizuri ma jistghux jistennew.
Friday, 28 December 2001
The Malta Independent
If you are confused don`t despair. You have` good reason to be and you must be perfectly normal. There was never a time I can remember when confusion reigns so supreme in economic management` and public financing.
On the 21st November 2001 the Minister of Finance made a lot of fuss whilst presenting the budget for 2002 that the structural deficit for 2001 will show a further decrease on the deficit of 2001.
The National Statistics Office (NSO)` has just published the actual government revenue and expenditure position as at 30th November 2001, just 9 days after presentation of the budget. Now unlike the Ministry of Finance , the NSO adopts consistent standards for reporting.` The Ministry changes the rules of the reporting` game as` it suits them.` Public Debt Servicing gets suddenly changed into Public Debt Interest but comparison of bottom line figures are still made to emphasise artificial improvements without noting the change of modalities. Grant revenue which is normally and correctly considered as a financing item suddenly gets shown as recurrent revenue with a footnote as tiny as being illegible without a magnifying glass.
The NSO don`t play these games. They can be criticised for defects but not for inconsistency. And according to the January to November public finance figure published by the NSO the deficit increased from Lm92.4 million in the same period last year to Lm109.9 million this year. An increase of Lm17.50 million being 19% increase that nullifies the improvement registered in 2000 over 1999.
Obviously what counts is the full year figures to December 2001. But with the economy standing somewhere from flat to contracting I fail to see where the improvement in public finances is coming from in the month of December if not from some artificial window dressing accounting exercise. No wonder I am confused.
And to complicate matters further I seem to remember that on budget presentation just over a month ago the Minister had ceremoniously informed us that he had everything wrapped and ready to net a cool Lm47 million from privatisations which will go through by the end of the year. Whilst we heard that the government authorised negotiations with a chosen preferred bidder in case of MIA we are still in the dark as to where the Lm47 million which had to hit the government`s bank account by the next Monday midnight are coming from. If you are confused too, welcome on board.
But the continuous stream of so called `victories` which our negotiators are scoring with the EU with a monotonous six monthly regularity has tied a big bow ribbon on the financial confusion. Just reason it out. Malta today offers non-residents the facility to purchase one property unit for personal non-commercial use provided this is in a price bracket high enough to exclude competition with first time home buyers.
This facility is available by application except for some large developments` mainly projected towards foreign up-class buyers where blanket authorities have been given even for multiple purchases. Malta can extend or reduce this facility as it wishes in accordance with the prevailing economic conditions.
The `victory` we registered is that upon membership all EU residents may purchase as of right any property unit and can buy more than one unit if they prove residency status exceeding 5 years duration. Instead of the Lm100 million pre-electoral pledged funding `victories` these days have becoming synonymous with giving up less of our rights than the acquis communitaire originally expected of us.
Reality is that the present system of controlled acquisitions by non-residents without unfair and socially unjust` competition with first time home buyers serves us quite well. How dismantling this system could be a victory simply adds to my confusion.` Can someone help me ease my confusion a bit` If freedom of movement of capital gives the right to acquire shareholding in Maltese companies,` who is going to stop foreign investors from buying the` equity of Maltese property companies who satisfy the five year residency status` Happy New Year!
Monday, 24 December 2001
Corrupt pseudo democracy
Malta is a corrupt pseudo democracy. The Housing Authority saga which emerged these last weeks prove this beyond any doubt.
Just look at it objectively.` In the run up to the last election` a big scandal issue helped the PN gain popularity and democratically obtain an mandate to rule this country like a fiefdom for the following five years. Who could trust a Labour government that had pledged to be whiter than white and then in less than two years it is landed with a housing scandal of the Lay-Lay type`
The pre-election weeks are a difficult time` for anyone defending himself` from corruption. The claims tend to stick especially if their originators control a network of media connections which re-inforce the message regularly and effectively. But defending yourself from the accusation take time and in people`s mind as they approach the ballot box the person accused of corruption and the party to whom he belongs are guilty and unworthy of their trust.` Tell it to Alfred Portelli!
Years pass and the slow turning wheels of justice finally confirm that the corruption charges were void, totally invented purposely to do electoral damage to the person and to the party.` The inventors of such malicious campaign are fined a miserly Lm600. A small price to pay to gain the government.` They do not even bother to appear in court to defend their case. Clearly they know they have no case.
But it does not stop there. The Chief Executive of the Housing Authority who is proclaimed to have privately taken credit for participating in the sham scandal to shame a Labour Government in the last lap of the last election campaign, suddenly gets fired from the Housing Authority. No explanation or reason is given. The Chairperson of the Housing Authority who is normally very liberal with her criticism of whatever Labour says or does in spite of her apolitical public office, loses all willingness to speak, to explain and to give proper account to the public of why the Chief Executive had to fired.`
But don`t start any fund collections for the ex-Chief Executive.` Rather than being investigated for whatever caused his dismissal from the Housing Authority he is offered a cosy executive position at Castille and given a promotion. Yet rumours and implications about what led to his dismissal from the Housing Authority abound.
After several months of seeking corroboration the Leader of the Opposition makes serious accusations in Parliament about a scandal cover up and claims that the government is being blackmailed by the ex-Chief Executive in order not to whistle-blow how the sham scandal of the former Labour administration was fabricated.
In any serious democracy the government would appoint a full judicial investigation. In a pseudo democracy these allegations are first completely ignored and after pointed pressure to account and explain we get a judicial letter from the ex-Chief Executive demanding that the Leader of the Opposition keeps mum or repeats what he said out of parliament to permit libel proceedings.
The famous Chief Executive instead of explaining why he was fired from The Housing Authority and as a result given a promotion at Castille thinks it is within his right to remove parliamentary privileges to the Leader of the Opposition so that he would be able to stall the investigations with long winded libel proceedings.
See how the government treats its executives. Gauci Borda at the Ministry of Fisheries was shamed and sidelined for having the audacity to expose financial malpractices at his Ministry which the government shows no willingness whatsoever to bring its perpetrators to give proper account for their actions. Sciberras Grioli on the other hand is spared all investigations and promoted to a cushy job outside the Prime Minister`s Office. And meanwhile Tarcisio Mifsud is denied all compensation for the political violence he suffered and is discriminated by being paid the lowest performance bonus even though all nationalist and labourites agree certainly on one thing: Tarcisio is one of the most dedicated and loyal employee of the whole public service who works long hours beyond his call of duty and whose loyalty to the organisation is untainted by his political beliefs.
Lord grant me this` wish this Christmas. Let this be the last Christmas under a pseudo democracy!
Sunday, 23 December 2001
Il-Kullhadd Nghid Ghalija
Nghid ghalija din is-sena mhux se nilqa` l-istedina biex niehu sehem fil-programm L-ISTRINA fuq TVM biex jingabru flus ghal Community Chest Fund.
Mhux ghaliex il-kawza m`hijiex nobbli jew ghandi xi haga kontra l-Community Chest Fund. Xejn minn dan.` Izda ghax dan il-programm nintuza biex jidolizza lil dawk li jmexxu XARABANK u jpengihom bhala xi benafatturi kbar tas-socjeta Maltija meta l-fattu huma l-kuntrarju.
Il-fatti huma li dawn jerdghu il-flus tat-taxxi tieghi u tieghek biex imexxu programmi fuq TVM li huma prerogattiva tan-Newsroom. Filwaqt li l-gurnalisti tan-Newsroom tal-PBS jibqghu idawwru subghajhom in-nies ta` XARABANK jithallsu sew talli jtellghu` program li jippruvaw kemm jippruvaw biex jaghttuh bil-gelu, il-qalba tieghu jibqa` program strument f`idejn il-Partit Nazzjonalista biex idawwar l-opinjoni pubblika kontra il-Partit Laburista.
U ghalhekk ma rridx inkun f`partecipi f`bicca propaganda li tati platform popolari qawwija` biex tintuza kontra l-Partit Laburista. U ghal dan ghandi ragunijiet tajbin bizzejjed. Ha naghti tnejn.
Fil-passat ikkritikajt lil ta` XARABANK li rari jaghzlu suggetti li jhammru wicc il-gvern. Donna il-kritika f`dan il-pajjiz, kontra kull prattika f`pajjizi demokrtici, hija dejjem iffokata fuq l-oppozizzjoni minflok fuq il-gvern. Per ezempju ghedt ghala qatt ma ddiskutew il-bejgh tal-Mid-Med Bank u l-akkuzi tad-Daewoo li jimplikaw lil Ministru John Dalli.
Fis-sajf li ghadda kien ikkuntatjani Peppi Azzopardi u qalli li kien bi hsiebu jtella Xarabank fuq din it-tema u stedinni biex niehu sehem. Ghedtlu li jien qatt ma accettajt li nattendi Xarabank izda naghmel eccezzjoni u ghal program bhal dan lest li nattendi basta jattendi wkoll il-Ministru Dalli halli nista` niffaccjah b`mod dirett u forsi jirrispondi mistoqsijiet li ili naghmel u qatt ma gew imwiegba.
Ma Peppi Azzopardi iddiskutejt is-suggett fid-dettal u anke wrejtu dokumenti pubblici li ghandi f`idejja biex insahhah l-argument tieghi. Issa ghaddew aktar minn tlett xhur. Saru tlettax il-Xarabank.` Il-gvern wasal biex ibiegh aktar tezori u jidher li tbazwira tal-Mid-Med ser terga tirrepeti ruhha.` Izda tahsbu li jien smajt xi haga ohra dwar dan minghand Peppi Azzopardi` Lanqas telefonata! Jidher li l-programm ma ghaddiex mill-agenda poltika ta` min ihallas biex jittella program bhal Xarabank.
Issa harsu ftit lejn` ir-rizultat tas-survey tal-MBA. Super One TV jirbah kuljum barra il-gimgha. Naghmlu x`naghmlu ma Xarabank ma nlahhqux. Fi Frar li ghadda dan kellu udjenza ta` 160,000 meta kienet saret ix-xandira tal- La Salle. F`Novembru issa nizel ghal 139,000 filwaqt li program ta`divertiment qawwi bhal Xalamita gab xi 35000.
B`kumbinazzjoni ohra is-survey sar fis-26 t` Ottubru meta Xalamita kellu format imbiccer biex jakkomoda, kif doveruz, lil Konferenza Generali tal-Partit Laburista. Min jaghmel is-survey, Dr Mario Vassallo, dejjem b`xi mod isib xi haga li minnha nnifisha tiffavorixxi lil Xarabank. Donnu rating gholi ghal Xarabank ghadnu importanza politika u kummercjali ghal xi interssi mhux daqstant mohbija.
Izda jien f`Malta nghix u xorta nsostni li f`cirkostanzi bhal tal-lum fejn hawn tant ghazla x`tara anke fuq stazzjonijiet barranin li taqbad bil-cable u bis-satellita difficli hafna li ttella udejnzi bhal dawn bi programmi normali jekk ma jkunx hemm xi krizi jew issues jaharqu fuq skala nazzjonali.` Fis-26 ta` Ottubru dawn l-issues ma kienux hemm. Allura nghid bejni u bejn ruhi Xarabank possibbli tellghu xorta 139,000 ruh`
U domt nistaqsi dan lili nnifsi sa ma hareg survey iehor THE MEDI WAREHOUSE li gie` maghmul propju fl-istess jum bhas-survey tal-MBA u b`metodoligja simili hafna.` U min dan is-surevy jirrizulta li filwaqt li Xarabank f`dik il-gurnata partikolari ghadda lil Xalamita li kif ghedt xejn ma kien normali habba l-konferenza, izda l-udejnza ma tersaq xejn lejn il-139,000 li qalet l-Awtorita` tax-Xandir. Xarabank kellu udejnza anqas milli kellu Under Cover nhat ta` tnejn li skond l-Awtorita kellu 76,000 telespettatur izda skond is-survet tal-Media Warehouse kellu l-akbar udejnzi tal-programmi kollha fuq it-television lokali u barranin kollha b`udjenza ta` madwar 83,000 telespettatur.
Issa wiehed jifhem li minn survey ghal iehor tista tohrog cifra li tvarja minn 76,000 ghal 83,000.` Izda ma tifhimx kif cifra ta` 139,000 f`survey tista tinsel ghal anqas min 80,000 f`survey li jkun sar bl-istess metodolgija fl-istess jum. U jien naghti kredibbilita hafna aktar lit-tieni survey ghax jikkonferma survey iehor li ahna stess konna ghamilna internament hmistax qabel.
Jidher li f`kull ma jghamlu ta XARABABK hemm l-id ta` min ghandu interess politiku li jzommhom fil-wicc. Ghalhekk m`inhiex sejjer l-ISTRINA.
Friday, 21 December 2001
The Malta Independent
Post-Laeken ` Pre-Christmas
The EU summit concluded last weekend at Laeken under the Belgian presidency has been described as a leap of faith for the EU.
The present EU members have irreversibly decided that enlargement is politically essential and already overdue and that it is to happen in a big bang including 10 countries of the 12 applicants ( excluding Bulgaria and Romania who need more preparation time) sometime in 2004.
Enlargement is expected to deliver stability and prosperity to eastern and southern Europe, and underpin democracy and the rule of law in these oft heretofore turbulent regions.
But this cannot succeed unless the EU institutions remain efficient and are perceived as legitimate. European integration makes democratic control of the EU institutions ever more necessary. The challenge for the Convention to be held next year and the Inter-Governmental Conference (ICG) scheduled for 2004 will be how to succeed in rationalising and simplifying the EU structures without losing the capacity to accommodate the separate identities and guard the jealous sovereignty of the member states.
This is almost trying to square the circle. As the EU enlarges,` democratic decision-making will be indispensable to preserve efficiency and yet this democratic process in itself challenges the preservation of sovereignty of the individual states, especially the smaller ones like Malta.
Against this background one can assess how risky the present government`s TINA (there is no alternative) approach to EU membership is. What if the circle is not squared What if next year`s conference and the ICG of 2004 produce an EU structure which gives preference to the democratic values in the decision making mechanism of the enlarged EU over the preservation of sovereignty of individual states, especially the smaller ones Are we to carry on regardless or should we hold our breadth, give priority in the allocation of resources to addressing structural inherent domestic economic problems, and then decide as to our future relationship with the EU on an informed basis when the shape of the future yet to come is known and defined`
Beyond mottos, logos and rhetoric this is the main distinction between our two main political schools regarding their EU policy.` It is not that the PN is in favour of the EU and the MLP is against it. It is that that the PN approach` EU membership project as an act of faith to be achieved at any price including loss of sovereignty. The MLP is a more wait and see, not for the foreseeable future,` without closing all doors to future evolution of such policy into full membership if circumstances change sufficiently to make the policy change in Malta`s best interest.
Much will depend as to what comes out from the Giscard d`Estang Convention and the subsequent ICG. Nothing is taboo is the brief given to the convention. If the result is a more flexible Europe moving away from the one size fits all model` adding value to the nation states without excessive regulation and interference,` than Labour Swiss policy could become congruent with membership. If on the other hand post-2004 EU emerges as a rigid one size fits all centrally controlled organisation,` it would be in our interest to preserve our flexibility and differentiation values by staying out whilst maintaining the best possible relationship.`
Rather than divide ourselves over the EU we should unite is forging true solutions for our serious economic problems which we have to solve for ourselves without waiting for big daddy to do it for us. We can get more serious about the EU after 2004 when we would know what sort of EU are we talking about.
Pre-Christmas, whilst wishing my readers a very peaceful Christmas I pray that progress in finding a true solution for the Palestinian problem by the general acceptance of the emerging statehood for PLO is not destroyed by extremists of Hamas and Sharon who do not impress anyone that they are seriously searching a solution for peace.
Monday, 17 December 2001
Beware Boxing Day (2)
Another week has gone by and nothing official came out regarding the privatisation of several entities which need to be concluded by the end of the year.` Without such privatisation the budget figures for 2001 revised as recently as 22nd November 2001 will have an extra hole of Lm49 million.` There are just 9 working days left to go.
It is getting ominously close to it being a Boxing Day affair as I had predicted. One hears of accounting manoeuvres of companies disposing of their real estate without getting a real lira for it in hard money but have to pay the government both the capital gains tax on such paper transaction, as well as distribute all accumulated profits (including that from the sale of property) to government before the end of the year. That all this money has to be raised through bank finance by companies waiting to be privatised is further proof that this is not real privatisation but mere window dressing accounting or in layman`s language more like cooking the books.
The privatisation of` the main three pieces on the table is being approached wrongly and will bring economic and social consequences for many years to come if matters are concluded as I suspect they would when critics are on holiday and in good spirit between Christmas and New Year.
Giving a 7 year licence to operate all gaming and lotto is an invitation for social upheaval. Amortising the initial fee and the investment necessary over 7 years will constrain the winning consortium to go for revenue growth far greater than its natural trend. Government may make a good deal initially but the social and economic consequences will come back to haunt its successors.
The real way to go about it is the Maltacom way.` Create a 100% owned commercial entity, give it a reasonably long license to amortise the investment without having to force socially dangerous growth in the gaming and gambling culture, keep effective control by retaining 50% plus of the equity and sell the minority equity on the local and if possible or necessary on the international markets.
The same goes for MIA. Government wants to sell the airport operation by privatising 40% of the equity to a consortium dominated by a technical partner and then float the remaining 60% to the general public. The technical partner will thus dominate the fully privatised company while charging hefty technical fees for its inputs nonetheless.
This obsession with technical partners could be a very slippery road as the sale of Mid-Med to HSBC has shown. Not that we don`t need to tap foreign technology inputs. But it is cheaper to buy these inputs rather than to include them in packages involving equity sale which locks the local company with one particular technical partner. By acquiring` a dominating position the technical partner will be given the right` to exact juicy commercial terms for the technology inputs.` I can assure that these would be` much juicer than in case of a straight sale /purchase agreement which could be undone with little complications in case of non-performance.
Take Maltacom`s mobile subsidiary operating the Go mobile brand. It bought technology without sacrificing equity positions. Its technology proved superior to their renowned competitor that had the advantage of a 12 year monopoly. Yet Go mobile bit deep into its market share in its first year of operation. Consumers were advantaged by a wide choice of service and much reduced prices.
On the other hand MIA and the Lotto operation will remain` natural monopolies. Consumers will have to take their service when they need it without matching offers from competitors. Technology partners will feast on their monopoly status.
As to the Freeport it makes no sense to privatise it when it is still returning` losses. This opens the` unappetising prospect of separating the` bones from the meat so the bones stay with the government to be funded from our taxation whereas the meat goes to the private operator who gets the reward for all our past massive investments in these projects.` The government was positively advised to get the Freeport running as well as it should before proceeding with privatisation. We will know in due course why government chose to ignore this advice.
To justify its privatisation mess-up government critics often pour scorn on the fact that 17% of Maltacom`s equity in Labour`s` privatisation process was sold through GDR`s in bearer form. Last weekend this criticism was made by` a columnist whose understanding of finance does not go beyond leaving unpaid bank loans raised for projects he promotes` that never take off commercially.
Maltacom equity tapped the international market as there was no way that the full Lm36 million could be raised solely on the local market. If we had tried tapping only the local market the IPO` price would have been much inferior to the 90 cents it was launched with. But by intenational standards` Lm36 million was a small issue and the only way it could be done was through a GDR where all the shares are registered in the name of the depositary who can make a market to the individual GDR holders. The depositary chosen was the best of the breed- Bank of New York. The initial international investors were disclosed and we could choose the best international corporate investors as indicated by HSBC who was leading the IPO jointly with Mid-Med Bank. Anybody who wants` to know their identity need just look up the IPO documentation held at the Ministry of Finance. Regarding subsequent trading Bank of New York will make its records available to Maltacom at any time it wishes. There was nothing sinister.` Just pure practical financial procedures following the best international standards.
When government critics start raising their defences by referring to the Maltacom `bearer` issue I start worrying.` I realise they need all straws to defend themselves from the rough waters they are leading us into.
Sunday, 16 December 2001
The Malta Independent on Sunday Taliban a` la Maltais
After the 11th September 2001 Taliban has adopted the meaning of extreme fundamentalism. It fits someone who believes in a cause beyond the call of reason and is prepared to use all means fair or foul to achieve` such cause.
The French ambassador Mr Destremeau, charming as a person but very much short on diplomatic skills, has donned on himself the mantel of Taliban a` la Maltaise. Strange that this happened right when he meant to criticise the Leader of the Oppositon for the mere audacity of suggesting that` certain high exponents of the EU tend to adopt a Taliban approach when they argue the case for Malta` membership and many of them have first hand knowledge of the Maltese realities not better than that of` the` Talibans.
In an interview he gave this week to the Malta Independent Mr Destremeau made two emphatic very undiplomatic points. First that Dr Sant has insulted Mme. Nicole Fontaine, president of the European Parliament , by calling her` Taliban in a way degrading her personality. This is a re-cycled untruth which undiplomatically engages a senior diplomat to become an integral part of the PN inspired network to warp and thwart whatever Dr Sant says.` `
Dr Sant point is valid and diplomatic. The EU officially states that Malta as a member will have to abide by the whole acquis communitaire following whatever transition periods that are agreed. It officially says that it is up to the Maltese to make up their` mind whether this would good or bad for them. They only go as far as saying that Malta has or could have the right credentials and capacity to make it to membership which is far different from saying that this would be in Malta`s best interest.
At the unofficial and personal level,` many exponents, without much supporting evidence and without much first hand knowledge of local realities,` cross the line and argue that it is in Malta`s interest to join as members of the EU.` They repeat such mantras as` Malta`s sovereignty being` strengthened by pooling it in a project which is on an irreversible road to central federalism.` Such Taliban style fundamentalist arguments is oft repeated by the likes of Mr. Destremeau.
But in his interview Mr Destremeau exceeded all limits of objectivity let alone of diplomacy. He basically appealed to` the local Bishops to come out in the open to support Malta`s case for EU membership.` He totally and conveniently confused two issues which should be kept distinct and separate.` We should not confuse whether the EU itself is a good project which deserves praise and support on an international level even from the religious authorities, to the argument` whether it is in Malta`s best interest to form an integral part of such project.
Because I think that the United States of America is an admirable country which deserves respect and appreciation it does not mean that, even if I were to be given a chance,` I would want to swap my citizenship from Maltese to American. Because I think that Mr Destremeau is unworthy of holding the post of French Ambassador to Malta it does not mean that I no longer consider Paris to be the most romantic city in Europe.
In a manner which fully deserves the Taliban label Mr Destremeau confuses the two issues and argues that Malta will remain isolated if it does not join the EU and would not be able to compete in a globalised world. These are strong, partisan and unsupported assertions. They are the stuff which should be intelligently debated by our political schools. They present a choice between` the means to a common objective of` giving our country the best sustainable standard of living possible.
They are not matters which fall within the remit for foreign diplomats to discuss publicly supporting this political view` against the other.` Much less it falls within` the terms of remit of the local Church authorities,` as Mr Destremeau instigates. If the argument were` between a free market model as against a centrally planned economy model,` I could understand that the Church Authorities could have a say in guiding its flock to the values of freedom, liberty and social justice.` But I fail to understand what role the Church could have in giving any direction to the faithful in choosing between` whether it is in the best interest of Malta to seek one size fits all membership or seek the special tailor made relationship as promoted by Labour`s Swiss model.
The choice which Malta will soon have to make in deciding for or against membership does not need to be further confused by imprudent inputs by foreign diplomats. If anything such inputs work in favour of those who are wary that EU membership would severely challenge our nascent sovereignty achieved after millennia of bondage and colonialism.` If foreign diplomats feel licensed to interfere in guiding us in taking such decisions just imagine what a federal driven EU would do whenever local interest would be in conflict with the central interest of the whole community.
My case against EU membership rests on the argument that economically and politically we are better off positioning ourselves slightly different from the rest so that we can leverage our differentiation and flexibility to our long term economic advantage. These complicated arguments cannot` be well explained if foreign diplomats continue to transmit noise whilst instigating the Church to join the fray in sixties style. Mr. Destremeau should start learning diplomacy from chapter one.
Ir-rizultati tas-surveys rigward l-udjenzi tal-medja li hargu f`dawn il-jiem jghamlu lit-team ta` Super One nhossuna` kburin bir-rizultati li ksibna. Hargu zewg rizultati li saru bejn wiehed u iehor fl-istess zmien u li b`mod indiskutibbli ikkonfermaw li Super One TV u Super One Radio ghandhom l-akbar udjenzi.
Mhux il-post li naghti l-fatti u l-figuri izda din did-darba id-distakk bejn Super One u dawk ta` warajna tant hu kbir li hadd ma hareg jikkontesta r-rizultat. Fil-fatt il-media ta` fil nazzjonalista difnet dawn is-surveys malajr kemm jista` jkun u raw kif ghawgu il-ftit li qalu biex icekknu is-supremaizija li wrew il-media Super One.
Bizzejjed wiehed jghid li fil-faxxa l-aktar importanti ta` fil-ghaxija Super One TV rebah l-akbar udjenzi f`sitta minn sebat`ijiem.` U fl-uniku gurnata li ma` rbahniex naqqasna sew id-distakk li kellu Xarabank permezz tal-programm gdid u popolari XALAMITA. Dan apparti li s-survey b`kumbinazzjoni sar fil-jum tas-26 ta` Ottubru 2001 meta XALAMITA ma kienx fil-format solitu billi kellna coverage qawwi u doveruz lejn il-konferenza generali tal-partit Laburista li saret propju dakinhar. Jekk trid emmen fil-kumbinazzjonijiet li b`xi mod dejjem jahdmu favur Xarabank.
Imma it-taghlima li ridt nislet illum mhux fuq in-numri tas-survey. Imma fuq il-fatt li b`rizorsi hafna anqas mil-kompetituri taghna Super One irnexxielu jaghmel hafna izjed. Minghajr ir-rizorsi tal-licenzji li ghandu l-PBS u minghajr il-flus li jigu ppumpjati lin-Net sahansitra minn flus il-poplu permezz tal-MIC, Super One xorta ghamel u pproduca hafna izjed milli pproducew il-kompetituri tieghu.
U dan ghandu jkun mudell ta` kif irridu nsolvu l-problemi tal-pajjiz. Ma nistghux insolvu l-problemi tal-pajjiz kif qed jaghmel il-gvern nazzjonalisti. Ma ssolvix problemi billi tintaxxa lin-nies halli l-gvern ikollu aktar f`hiex jiffanga u x`jisparpalja. Il-flus irridu nhalluhom f`idejn in-nies. Jekk nigbru t-taxxi minn min ilu jahrabhom iridu jew imorru biex jirruducu id-deficit jew jintraddu lura lil min ilu jhallas it-taxxi sa lanqas centezmu.
Biex jiffinanzja l-operat tieghu il-gvern mhux aktar taxxi ghandu bzonn.` Ghandu bzonn ghaqal u galbu biex it-taxxi tal-poplu jigu wzati sew bl-efficjenza li trendi u li tkabbar l-ekonomija u mhux f`infieq bla sens li johnoqha.
F`Super One ma nibghatu taxxi u kontijiet lil hadd.` Lanqas il-gbir li konna tradizzjonalment naghmlu fil-Milied m`ahna ser naghmlu u dak li gbarna is-sena `l ohra ghaddejnieh lil Partit.` `Il-mezzi ta` Super One jghinu lil Partit biex bhal ma ghamilna f`jum ir `Repubblika nigbru b`mod tant trasparenti biex insahhu ir-rizorsi tal-Partit Laburista.
L-operat tas-Super One niffinanzjawh kompletament mil-introjti tar-reklami.` U min jaghtina r-reklami ma jaghtihomniex bi pjacir.` Jaghtihomlna ghax ikun qed jaghmel investiment li jrendi.` Ghax jaf li l-flus li jonfqu maghna jipproducu bejgh u ordnijiet ferm aktar min reklamar fuq mezzi ohrajn. Ghax il-programmi ta` Super One jigbdu l-aqwa u l-akbar udejnzi.
L-istess irridu naghmlu biex insewwu l-problemi tal-pajjiz. Flok nintaxxaw u nghasru dejjem izjed in-nies biex il-gvern ikollu aktar x`iberbaq irridu, naghmlu hafna izjed b`hafna anqas.` Irridu dak li hu tal-poplu immexxuh sew u mhux inbieghuh b`irhis biex insolvu il-problemi tal-lum u noholqu problemi hafna akabar ghal ghada.
Kburin b`dak li rnexxielna naghmlu f`Super One.` U nemmnu li dan ghandu jkun sinjal ta` fiducja fil-Partit Laburista ghal min ghad ma ghandux fiducja bizzejjed li l_Partit Laburista jista soluzzjonijiet veru ghal problemi li dahhlu fih il-pajjiz hmistax il-sena ta` era nazzjonalista. F`gieh pajjizna din l-era jehtieg tintemm illum qabel ghada qabel ma jberbqu `l ftit li fadal.
Friday, 14 December 2001
The Malta Independent
Doing more with less
Doing more with less is the only real and lasting solution to extricate this country from the financial and economic crisis it is in and which continues to aggravate.
The main difference between our two main political parties is not, contrary to general impression, their policy regarding the future relations with the EU. Yes their position is different here but it is a difference of degree. Both positions aim for a stronger relationship with the EU one through one size fits all` integration and the other through a tailor made special relationship.
The main difference is in the economic philosophy of the two parties.` The nationalists motto seems to be that of doing less with more whereas labour`s policy is diametrically opposed of doing more with less.
The nationalist record in government is a continuous record of recklessly spending their way through problems.` Take Malta Drydocks. Two hundred million pounds and more of useless subsidies over the last 15 years still leaves the Drydocks commercially unviable and waiting` to undergo the real re-structuring which is being faced 15 years too late. Just imagine what real re-structuring could have been engineered if these funds were applied to finance productive investment to make the Drydocks truly commercially viable. What a waste!
And you can relate the same story all over again in all those economic areas which are draining our tax money without giving commensurate value added in return. From the civil service to Gozo Channel operations, from Freeport to Water Services.
These our real problems.` This is what is` forcing half the government represented by Min John Dalli to resort to taxing a moribund economy and forced sale privatisation in order to finance the irresponsible spending habits of the rest of the government.` Whilst other countries are re-visiting Keynes in pump-priming their soft economies through additional spending and lower interest rates, our government is prisoner to its own past excesses and is being forced to drain liquidity out of an illiquid economy.
The barter phenomenon is on the increase a clear indicator of economic problems yet to come. Contractors get paid with part of the property they build which they then transfer to their suppliers of concrete and steel who use their limited liquidity to pay their increasing tax dues leaving private sector creditors waiting for better times. Barter is now reaching new dimensions extending itself also to the purchase of services like repairs maintenance and insurance.
Labour economic policy points 180 degrees in the opposite direction. The country`s solution cannot lie in taxation to enable the public sector to continue to fatten itself at the expense of the private sector. The solution is in the public sector giving an economic lead in making much better use of the resources already at its disposal and thus leaving more spending power in the hands of the private sector.
Can this be done` Of course it can be done` if there is strong leadership and clear objectives. On a miniature scale we have just did it at Super One Television. With resources much less than our competitors we have topped the official rating charts for the third successive survey this time with a wide gap over the next in line.` Whilst TVM have the millions collected through TV licences and NET have the limitless financial resources available from the power network surrounding the nationalist party, apart from the advertising revenue from the political spots which MIC pay from our tax money and in which Super One refuses to partake on a matter of political principle,` Super One has to operate on a commercial basis with revenues coming only from pure` commercial operations in a very competitive area.
At Super One we did more with less and beat those who did less with more.` We registered better results both in audience ratings as well` as in commercial bottom line. The country`s problems need similar treatment.
Monday, 10 December 2001
Can the economy still be rescued`
This is the question I am often ask myself. The economy has experienced three legislatures of benign neglect by a nationalist administration. The 22 month interlude by a short term Labour Government between October 1996 and September 1998 helped restore some sanity to an economy built on an unsustainable platform of consumption and care free spending.
But this short term respite has now run out of fuel and the ship is making water from all sides.
Obviously this is not what the government says.` But really I don`t give a damn what government says anymore. Like the captain of a sinking ship there is nothing sensible coming out from that source these days. On the contrary, rather then acknowledging the problem and trying to contain the water inflow which will sink the ship the government is more bent to convince us to deny our own senses and believe that all is well and that the ship is still sailing smoothly.
The first nationalist administration between 1987 ` 1992 found a debt free economy with capacity for consumption driven economic growth without compromising its fundamentals. The nationalists know only one recipe: money no problem. It worked like magic.
When re-elected in 1992 the same recipe was adopted but it no longer worked. The economy started running up debt at a perilous speed and debt accumulated to dangerous levels. Public deficit spun out of control and the 1996 election was forced on to the government to avoid disclosing a true fiscal deficit for 1996 of Lm120 million against a planned one of Lm 38 million. Such disclosure would have kissed their re-election chances good-bye.
Strange as it may seem the 1996 election results was a windfall for the nationalists. A one seat Mintoff dependent parliamentary majority and a Labour government firmly pledged to devote initial energy to changes in` the tax system rather than addressing the deficit, was a perfect recipe for a quick return to government permitting a totally unjustified pinning of all economic ills on Labour`s interim 22 months in government.
But problems do not just go away when a government changes.` Having exhausted the country`s debt capacity and unable to detach themselves from the money no problem mentality the government developed into two factions: John Dalli and all the rest. All the rest keep spending and pretending that the 1987 formula would work in all circumstances. John Dalli needed to somehow fund the wreckless expenditure of his `colleagues`.
Short of miracle powers John Dalli had a choice between tax revenue enhancement and generating one-off privatisation flows to contain the debt growth.` He was forced to use them both. But these measures needed to be packaged with Harry Potter Magic wrapper to make them look what they are not.
Increased taxation was thus packaged as tax enforcement. Why criticise the government for taking in more tax if we are being successful in bringing tax evaders into the net, regularly pontificates the Prime Minister. We are treated as foolish idiots. Because the problem is not that tax evaders are being reigned in. The problem is that the increased revenue is just being frittered away rather then being passed back to the lower classes who always paid their taxes to the last cent and who desperately deserve some respite.` Or if this is not permissible by the country`s state of finances, at least we could take consolation if we see the increased tax revenues reducing the deficit. But as I proved last week this is far from reality.
Privatisation revenues were disguised as new energy inputs to stimulate efficiency in the local economy. So far we experienced the shameful sale of Mid-Med Bank sale to HSBC which has benefited no one but the buyer. Regarding the impending privatisations I reserve judgment till they actually happen. But` placing itself in a position where it has to generate Lm47 million privatisation revenues` within the next 13 working days has all the omens of either playing magical window dressing accounting practices, or distressed asset sales.
So to revert to the original question can the economy be rescued` My answer is pointed and simple.` Only if a new government is elected before much more harm is done with a clear mandate and executive authority to administer the rescue medicine without expecting to have the comfort to study, consult, prepare reports or adopting trial and error solutions. The new government has to be practical and solution oriented.` Thick reports and useless seminars will not deliver.
Sunday, 9 December 2001
Il-Kullhadd Mhux Int Cuc`
Fi stqarrija wahda wara `l ohra in-nies li jmexxu l-MIC jippretendu li huma xempju ta` l-objettivita` rigward l-informazzjoni li jaghtu fuq il-process ta` Malta biex tilhaq l-ambizzjoni tal-gvern ta` shubija shiha fl-Unjoni Ewropeja.`
Fi stqarrija wara `l ohra l-attitudni taghhom lejn min imerihom hija wahda ta` suppervja; bhal jistaqsu Mhux Int Cuc(MIC). Bhal li kieku huma biss bravi.
Jippretendu li huma l-bibbja u kull min jikkritikahom huwa skorrett jew mhux infurmat.
Biex ikomplu jiehdu kreditu li mhux taghhom juzaw l-argument li la hafna minn dawk li huma kritici rigward il-progett ta` Malta bhala membru fl-Unjoni Ewropeja imorru ghandhom ghal informazzjoni mela b`hekk ghandhom il-kredenzjali ta` l-objettivita` u kull min jikkritikahom jaghmel dan b`malizzja.
Dan argument bazwi ghall-ahhar. Ghax tal-MIC qed joperaw bi flus ic-cittadin.` Is-sena d-diehla ser ikollhom kwazi miljun lira biex jonfqu f`pubblicita` favur is-shubija ta` Malta. Id-dritt li naghmlu uzu mis-servizzi taghhom huwa inaljenabbli.` Izda b`daqshekk ma jaghtihom l-ebda certifikat ta` objettivita`.` L-objettivita` tigi mill-kwalita` ta` l-informazzjoni li tinghata u mhux minn min jitlobha.
Dan apparti l-fatt li tal-MIC lili irrifjutawli diversi proposti biex jippartecipaw fi progetti li jaghtu nformazzjoni fuq il-progett ta` Svizzera fil-Mediterran. Wiehed minn dawn il-progetti kien dokumentarju televiziv dwar kif jghixu in-nies fl-Isvizzera, fin-Norvegja u fl-Islanda u jekk ihossuhomx li ghandhom xi haga nieqsa ghax pajjizhom, ewropew sa gharqubu, mhux membru fl-Unjoni Ewropeja.
Tal-MIC qaluli bl-iswed fuq l-abjad ghal darba darbtejn li huma jiffinanzjaw progetti li jaghti taghrif fuq il-progett ta` Malta bhala membru fl-Unjoni Ewropeja u ma ridux jippartecipaw fi progetti li jaghtu nformazzjoni dwar l-alterattivi `l ohra.
Jien ghalija dan huwa abbuziv u jmur kontra l-ispirtu jekk mhux il-kelma tal-ligi tax-Xandir u tal-Kostituzzjoni. Peress li tal-MIC ma riedux jaghtu informazzjoni fuq l-alternattivi ` ohra bhala Super One ma ridniex naccettaw reklami li jmexxu biss proposta wahda, dik ta` membri fl-Unjoni Ewropeja.
Mela llum gejna f`sitwazzjoni fejn il-MIC qed jidderigu hafna flus pubblici fuq TVM/Radju Malta u fuq NET TV/Radju 101 b`mod li ma hemmx bilanc fix-Xandir la fuq is-servizz pubbliku tal-PBS u lanqas kollettivament fuq il-media li taqa taht l-Awtorita` tax-Xandir.
L-Awtorita li s-sena `l ohra kienet thajret ticcensura lil Super One ghax ixandar avviz ta` meeting tal-partit u thajret tqisu bhalha spot politiku,` ma tidher xejn inkwetata rigward dan l-izbilanc flagranti fix-xandir in generali u fuq il- PBS in partikolari fuq materja daqstant distintiva fil-politika taz-zewg partiti.
Aghar min hekk iz-zieda fil-budget tal-MIC probabbli tfisser li filwaqt li dawn ma jonfqu xejn fuq Super One jonfqu hafna izjed minn qabel fuq Net Tvu Radju 101. B`hekk dan jakkwista fondi pubblici li permezz taghhom ikun jista` jsawwat lil Partit Laburista u jkompli jizbilanzja ir-rizorsi disponibbli taz-zewg partiti principali. Dan huwa attakk fuq il-pedamenti,` tad-demokrazija. Haddiem, ,` int bil-flus tat-taxxi tieghek,` bla ma trid, qed tghin lill-istazzjon tal-Partit Nazzjonalista!
Issa rigward l-objettivita ta` l-informazzjoni jien kelli diversi okkazjnijiet fejn ma qbiltx ma dak li qalu tal-MIC u sal-lum insostni li ghandi ragun.
Hafna drabi jkun hem hafna tidwir tal-kliem.` Per ezempju fl-1997 Dr Simon Busuttil li llum qed imexxi l-MIC kien kiteb li kieku jaghmel kalkolu fuq il-bazi ta` kemm tiehu s-Slovenja, Malta tiehu aktar minn Lm100 miljun lira fondi mill-UE. Kif inketbet ma kienx assolutament car li dan jigri, jekk jigri,` meta Malta tidhol membru fl-UE.` Ma kien hemm xejn li juri li Malta tkun trid taghmel hafna kontribuzzjnijiet kemm diretti bhala transfers ta` taxxa u kemm indiretti f`forma ta` prezzijiet ghola ta` affarijiet essenzjali li bilfors ikollna nixtru mill-Ewropa.
Min qara dan u hadu fil-kuntest ta` dak kollu li kien qed jinghad aktar iva milli` le` kien jifhem li Malta kienet qed titlef Lm100 miljun lira fis-sena ghax il-Partit Laburista ken iffriza l-applikkazjoni. Ma kienx spellut car hekk izda l-inferenza ghal min ma kienx` infurmat bizzejjed kienet cara. Ghax ta` x`jifhem li Slovenja qed tiehu l-flus u ghadha mhux membru u b`analogija Malta kienet tiehu l-flus ukoll kieku gvern laburist ma ffrizax l-appikazzjoni.
Kemm ircevejna flus minn mindu nehhejna l-friza llum nafuh. U hafna mill-informazzjoni li qed torog il-MIC illum filwaqt li rari tista tichdu fattwalment ikun miktub b`linwagg li jpengi l-futur hafna isbah milli fil-fatt huwa gustifikat li wiehed jassumi.
Bhal tal-mitt miljun! Il-hmerija hija li tal-MIC qed jiehdu l-premju ta` miljun avolja l-Lm100 miljun qatt ma gew!
Friday, 7 December 2001
The Malta Independent
Drydocks and politics
Fourteen and a half years and a handful of hundreds of millions of wasted liri later government swears it is getting serious about devising a real solution for Drydocks. This week`s task force report proposes halving the work force, launching of early retirement schemes and other measure to promote voluntary resignations.
At the risk of being unfair in not giving this plan a chance to unfold,` my early warning system indicates` that government is yet again using Drydocks as a political pawn. Government long term benign neglect of the Drydocks problem has created a situation where` a wide cross section of the population have had it up to their ears seeing so many millions being burnt annually in subsidies leading to nowhere.` Strange as it may seem` rather than being condemned for taking so long and wasting so much to address this problem, Government`s` popularity increases whenever it pretends to stand up to the Drydocks Section of the GWU .
So whenever government needs to leverage its popularity it pulls the Drydocks political levers. In pretending it is standing up to cut the waste and cashing on Labour`s understandable` unwillingness to cross swords with the GWU,` the government plays the Drydocks political game with admirable perfection.
The fact that it brought the Drydocks problems again on the fore-front of the agenda is indicative that government needs to leverage its political support in case it decides to go for the option of an election before the financial crisis blows the budget cosmetics apart.
And what more plausible reasons to go for elections than to stimulate industrial unrest at the Drydocks,` hope for some violence for good measure, and turn to the country for a mandate to administer to the shipyards the medicine which the patient` irresponsibly continues to refuse`
Drydocks is a serious problem. I strongly believe that Drydocks has the potential to be commercially viable if well managed. Eternal operational subsidies are no real solution for Drydocks. As a nation we just cannot afford them, certainly not at the level of recent years. Drydocks needs investment, serious training programmes for its workforce and a strong commercial direction leading the Drydocks to maximise its strengths and address its weaknesses. This can only be achieved if accompanied by responsible trade union practices removing resistance to efficiency and helping to control waste.` The ratio of directly productive to unproductive/indirectly unproductive has to be righted` to not more than 4:1.
But on a macro-economic basis the problem of the Drydocks is quite insignificant.` One of the arguments I can never rebut when I argue in favour of serious re-structuring is why so much emphasis is put on Drydocks whilst other sections of the public sector which are equally or even more wasteful are just allowed to get away uncensored and unchallenged.
How can you accept that government is serious in its intentions about Drydocks if it then allows Gozo Channel to continue with wasteful recruitment` when the whole transport sector between the two islands is subsidised annually by over Lm4 million for servicing the interest on the new ferry loans;` and when Gozo Channel returns no profit even though it is using these vessels without incurring any interest or depreciation charges.
How can you accept that the government has good intentions for Drydocks when it allows Freeport to get away with murder and allows Air Malta to be the only airline in the world that has increased its workforce in the last quarter of 2001.` How can you be convinced about government`s good intentions when such re-structuring is normally implemented in the first half of any legislature rather than in the last couple of years.
Solving the Drydocks issue is a priority but can only be done with the necessary fairness to win broad support if it is conducted as an integral part of a much wider re-structuring plan. Failing this,` my bet is that government is just using the Drydocks issue to further its political ends. This could be quite savvy politically but it is far from being the real solution which the country desperately needs.
Monday, 3 December 2001
The Malta Independent on Sunday Both Sides of Father Christmas
What would Christmas be without Santa` But Santa cannot make it alone. He needs the children to deliver presents to. Santa and the children create the great material spirit of Christmas which inevitably accompanies the underlying religious message of the birth of Our Lord.
This December the Budget Minister has decided to play both roles.` Both Santa and the children. The donor and the recipient.
He is the recipient for the extraordinary amount of taxation he has to collect in the last two months of this year. This week the National Statistics Office published the Government finance figures for October 2001. When confronted with the revised figures for the whole of 2001 announced the week before during the presentation of the budget for 2002, it results that the government has an uphill struggle to meet the revised revenue` figures.
According to these figures whilst in the last 2 months of last year the government collected Lm84 million from Income Tax, Vat and Social Security in the same 2 months of the current year it plans to collect from the same sources Lm103 million. An increase of Lm19 million equivalent to 23% has to be sucked by government from the private economy which is at best not increasing but more probably is in real outright contraction.
Loading this steep increase in transfer of funds to government on the sharp cash flow problems which have been plaguing the private sector for the last two or three years and coupled with the general reluctance of the banks to assist the corporate sector out of its dire straights, presents poor prospects for the private sector this Christmas.` We collectively have to play Father Christmas to the Minister of Finance who cannot resist Twist`s habit of always coming back for more.
It does not mean that it is this way with one and all. The Minister willingly inverts the role and dons the red robe of Father Christmas quite willingly when it comes to certain minority sectors of society.
When it comes to the funding of MIC the Minister has no problem in funding a 200% increase to provide an additional Lm600,000 to finance their publicity campaign in favour of Malta`s membership in the EU.
As Chairman of the commercial organisation running Labour`s Super One radio and TV I refused to accept MIC`s advertising bookings unless they agreed to spend pound for pound to inform also on Labour`s policy of special relationship with the EU. MIC conveniently refused this as they maintain that their brief is strictly to act within the objective of full membership.
I am more than sure that a chunky size of the additional budget conveniently passed on MIC in preference to much more deserving claimants, will be spent on additional` advertising` on the PN`s media in the most classical example of preaching to the converted.
But the implications are far deeper. This could be a covert way of using public funds to finance a political party and undermining the real essence of democracy. While Labour will have to turn on its faithful to garner a few tens of thousands of liri to finance their EU special membership campaign and eventually their general election,` the PN helps itself to easy access to our tax money to finance their EU policy and eventually also their general election campaign.
This is a serious threat to our democracy which Labour must seriously challenge through all democratic means by invoking the provisions of the Broadcasting Act and if necessary of the Constitution.
The Minister of Finance is also playing Father Christmas at the donor end when it comes to our privatisation programme.` Within the next 4 weeks in which there are left 18 working days. whilst many will be on a deserved break from the monotonous regularity of everyday economic problems, the Minister has committed himself to conclude delicate and detailed negotiation for sale of national assets to the private sector generating Lm47 million one-off privatisation revenues.
Boxing himself` in a tight financial corner like this leaves little room for manoeuvring negotiations to ensure that as a nation we get the most from our assets and that we will not have a repeat of the Mid-Med Bank shameful sale. And the supposed transparency with which such negotiations should have been conducted is notable by its absence.` We are not even aware of the parameters within which the offers are being considered. It would have costed quite a few thousand liri merely to get hold of the document which was accessible to the privileged few who are eager to pounce on their Christmas presents.
Words and figures continue to disagree
Government heaps glory on itself for the supposed achievement in reducing government structural budget deficit. In so doing it claims that the starting position at the end of 1998 ( government was sworn in on the 8th of September 2001) was Lm150 million.
The myth was belatedly but effectively smashed by Labour when it proved conclusively that the parting position was far from Lm150 million. Effectively it was planned to be Lm115 million at the budget stage presented in November 1997 and actual structural deficit as at Sept 1998 was Lm88 million broadly in line with original projections.
In the last quarter of 1998 as soon as Min John Dalli had time to re-organise his desk and switch on his computer once the re-election euphoria had died down, he` went on to a careful window-dressing exercise shooting up the budget deficit for 1998 to the maximum to create an advantageous starting position` with which to measure his supposed eventual` achievements.
But why should we take the parting position as December 1998` I think it is more realistic` to take the parting position as the end September 1998 when the Minister had still not cooked the books.` As can be seen from the table accompanying this article the structural deficit for the 9 months to Sept 1998 was Lm88,011,000. The structural deficit for the 9 months to Sept 2001 was Lm88,107,000.
There has not been a single lira of deficit reduction on a true like for like figures of the National Statistics Office in spite of having contributed to government Lm98 million more in tax under the headings of Customs and Excise, VAT & replacement, Income Tax and Social Security in the 9 months of2001 than in the same period of 1998. We also collectively paid some Lm15 million more on fees, licences or whatever term the Minister pleases to describe the government charges for the services it renders to its citizens. An increase in ordinary revenue of more than Lm113 million and not one lira drop in the structural deficit! How dare the government claim success in reducing the deficit`
Having smashed the myth that the deficit is effectively being addressed the Prime Minister shifted his defences by claiming that under Labour`s 22 months inter-regnum between his nearly 15 year stretch in government,` Labour did not manage to control and reduce the deficit.
Even this claim has to be challenged as not supported by official figures. Yet another case of words and figures disagree.
Labour was sworn into government on 28th October 1996.` Lest anybody dares claim that in the last 3days of October Labour played some `John Dalli` type of window dressing tricks in the accompanying table,` I also give official National Statistics Office figures for the government deficit on` January to September basis of 1996 and 1997.
The structural deficit of the first 9 months of 1996 under an outgoing nationalist government was already Lm106,442,000 and eventually finished the year at Lm124 million instead of the Lm38 million which John Dalli had planned when presenting the 1996 budget in November of 1995.
In 1997 Labour contained the deficit within the same figure of Lm106,553,000 in spite of passing special loans of Lm24 million to Malta Drydocks accounted for under Capital Expenditure.` It then effectively reduced this deficit to the Lm88,011,000 earlier mentioned in the first 9 months of 1998.
In two years between September 1996 to September 1998 largely under a Labour government the true structural deficit was reduced from Lm106,442,000 to Lm88,011,00 a reduction of` Lm18,431,000 equivalent 17%.` During the same period government ordinary revenue increased by Lm42,120,000.` So out of every Lm1 of additional revenue from taxation Labour government applied nearly 44 cents to reduce the structural deficit.
Compare this to the present government record where with Lm113 million more in ordinary revenue this year than in the same period of 1998 it did not reduce the deficit by a single lira.
It is high time that Labour starts challenging the void claims of success in deficit reduction with real facts and figures which show the exact opposite.
While the nationalist government is scoring successes in tax collection and enforcement by taxing the salaried middle income class,` its lax expenditure habits is blowing it all away.` No wonder the official national debt now stands at Lm1,023,000,000 apart from another Lm400 million hidden in the Treasury Clearance Funds and in dead bank loans guaranteed and serviced by government. And no wonder privatisation is now being approached in a sense of crisis having practically fully exhausted the country`s borrowing capacity.
The problem is that when the roof will financially and unavoidably cave in it will again be the lower and middle class that will be forced to carry the brunt of the damage`..unless a serious Labour government is elected in time to engineer a rescue operation from the impending` crisis.
Friday, 30 November 2001
The Malta Independent
Human nature is built on relativity. Hardly if ever there are any absolutes. Does one spoon of sugar in a cup of coffee make it too sweet` Yes for anyone used to drink coffee without sugar but no to the coffee drinker used to two spoonfuls.` So the same cup of` coffee with one spoon of sugar can taste very differently to different people.
Typical is the Prime Minister`s instant reaction to the replica delivered by the Leader of the Opposition to the budget presented by the government. The poorest budget reply he had ever heard` claimed Dr Fenech Adami just as I had thought that Alfred Sant had delivered his best ever budget replica speech.
I liked it because Dr Sant did not just` criticise; he actually showed the way forward with real and practical solutions. It is what serious voters should` expect from the opposition. Criticism comes easy. But anyone aspiring to be trusted with the responsibility to lead the country out of the identified problems should responsibly offer serious alternatives and practical solutions.
Apparently this is no coffee for our Prime Minister. He seems more comfortable with destructive criticism; with empty platitudes and demagogic assertions.` Dr Sant`s determination to assemble a wide social coalition to work out a broad based consensual restructuring plan seems to hit a sore psychic nerve with our Prime Minister. He expects to continue being` trusted to fix` the financial mess which he and his colleagues have so successfully engineered these last 14 years.` He expects that electors who were promised tax credit on a payments as varied as health insurance premium to house loan repayment instalments, should silently suffer and approve the savage attack on their standard of living by the passive impact of direct and indirect taxation.
Also relative is the definition of such intangibles as` greatness and wisdom.` Lou Bondi` thinks that I lack greatness and make immodest claims of wisdom. I often find myself at variance with Lou`s opinion which I all too often find motivated to deliver a specific though subtle agenda which always happens to disfavour the Labour Party. Malta must be unqiue in the democratic world. By Lou`s journalistic standards the opposition party deserve more criticism than the party in office. This weak I was interviewed by a pro-PN person supposedly on the 2002 budget but he was more interested to extract from me minute details of what the first budget of an eventual Labour government would contain,` rather than seek details of how the budget Minister is claiming that he can cash in Lm47 million in privatisation revenues within the next 19 working days from obscure negotiations still going on.
Still on this one Lou and I drink from the same cup of coffee. I never made any claim to greatness and restrict my claim for wisdom only the Friday morning.` In relatively terms though` that can hardly be defined immodest when from Lou`s side of the fence we have many contenders to eternal springs of wisdom 24 hours a day 7 days a week.
I also sense so much relativity in critics who so persuasively try to influence public opinion that Alfred Sant has missed the bus that could win him the next election. Such assertions by neo-believers in democracy who during their stint of power had publicly declared their unwillingness to spend five years in opposition under a newly and democratically elected government,` shows that such thoughts and sentiments persist. Only that it is now` being seen from the other side of the fence and that the vantage point is changed to suit the side on which the bread is buttered rather than the principles one believes in.
Thursday, 29 November 2001
In this last part of the analysis I test the budget against mainstream social criteria. Does the Budget for 2002 help to render Maltese society more socially just, more caring, more confident about the future for themselves and their children`
There are some minorities for whom special measures announced in the budget will bring welcome relief to their hardships. Foster parents receiving Lm12 a week for each child they foster is fully deserved.` `Full social assistance for mental health rehabilitation patients whilst they work is laudable. Increase in ceiling of capital assets before being disqualified from Non-Contributory Age pension is most welcome by its beneficiaries. Deduction from taxable income of alimony paid under marriage separation is a belated addressing of a very unfair situation. The increase in tax ceilings for couples who make a joint declaration only marks how unjust it is that ceilings of single or separate declaration married tax-payers have remained without similar adjustment.
But these measure effect a very small section of society. The mainstream of society, those who were hard hit by the last three budgets, those whose were promised most by the administration in their 1998 manifesto have again been given the short end of the stick.
Take a married couple where both parents work and have to sustain children attending private schools. They probably jointly master a gross of Lm10,000 and make separate declaration for income tax purposes. The Lm3 per week joint cost of living award will probably be taxed away at 25% (depending on how the joint income is split between the spouses) and the 10% N.I deduction will leave them with a net Lm1.95. If one of the spouses smokes one packet of cigarettes a day they are left with Lm1.25 per week. With inflation touching an actual rate of 4% they needed Lm7.70 to stand still. Their real standard of living will again reduce by more than Lm6 a week after they were hit again last year when the tax bands where lowered and fringe benefits were taxed.
The couple had heard the Minister of Finance saying that the worst was over and that the Tax Compliance Unit was getting well into gear thus reaching those who have been having it good at the expense of the majority of employees who pay tax right down to the last cent, fringe benefits included.` Hopes were high that as tax revenues were augmented by enforcement on evaders, the honest tax-paying middle class would be showered with relief.
Hopes were dashed!` The additional tax revenue, assuming it materialises,` is` needed to continue funding expenditure which the Minister just cannot keep in check.
This time it was even worse as the IMF obliged the Minister to pass through the Consolidated Fund payments to the tune of Lm20 million which in previous years were hidden in the Treasury Clearance Fund. Past payments which were understating the deficit remain buried in the Treasury Clearance Fund for future generations to make up for this administration`s past excesses.
Excluding this extraordinary inclusion, recurrent expenditure is planned to increase by only 3%.` Basically a freeze or outright reduction of recurring expenditure in real terms.` Judging by the Minister`s professed inability to control the expenditure addiction of his peers and with government going increasingly in election mode I give little credibility to the chances of expenditure being kept within targets. Where is the much needed additional spend on education, health, environment and law enforcement coming from`
Our mainstream family should rush to the electoral manifesto of the PN to remember what they were promised in order to attract their vote. They will remember they were promised a tax rebate on private schooling fees. This was given in 2001 but soon eroded by increase in school and transport fees. They were promised tax rebates on health insurance premia (promise no. 165) and on house loan repayments (promise no. 197). Paying some Lm1800 p.a. on such committed expenditure would give the mainstream couple a tax saving in the region of Lm 450 p.a. This is what they voted for.` Instead they are seeing again their real wages being eroded for the third consecutive year.
And to add insult to injury our mainstream couple are being told that this was a good budget and that the worst has passed. They shudder to think what it would be like when the Lm400 million hidden debt in the Treasury Clearance Fund and the dead bank loans of public enterprises which are still being serviced by the Government will have to be addressed. And when all public assets are sold and there is nothing left to generate the one-off revenues to keep the structural deficit from continuing to blow the national debt out of control.
And the mainstream couple can`t understand why the Minister continues to blame the 22 month Labour stint in government for all these economic ills when he has already had opportunity to present 8 budgets, 4 before and 4 after Labour`s tenure.` `What on earth can a short term government that orders a recruitment freeze do in 22 months that cannot be corrected in four budgets`
The Minister claims to be very optimistic about Malta`s future. Hope springs eternal. But with the economy effectively in reverse gear, the deficit obstinately unaddressed even though clearly expenditure has been under-estimated, assets being disposed of wholesale, tax reservoirs being sucked in and frittered away,` it sounds like the optimism of fools rather than the self-confidence` of experts.
Our mainstream couple take courage only from the fact that at best they have to endure only one more budget of senseless talk, figure manipulation, divisionary language and subtle but consistent assault on the standard of living of the middle class.
Wednesday, 28 November 2001
The success and failure of the Budget for 2002 has to be measured against the criterion of whether it is stimulating economic growth. This is a very important test.
Ultimately budgets and other economic tools are not used to reduce or augment the deficit, cut or add taxation, increase or decrease government expenditure. These are all intermediate targets.` The final objective is solid and sustainable economic growth because only this could lead to improved standard of living for the entire population.
Tackling the budget deficit in a practical and sustainable manner must include strong economic growth as an indispensable part of the policy mix. We have been grappling with unsustainably high public budget deficit since 1996 and on budget figures would still have not resolved it by the end of 2002. 7 years of deficit accumulating at an average real rate of Lm100 million p.a.` has added no less of Lm700 million to our financing needs which translated itself into doubling of the national debt from Lm500 million at the end of 1996 to more the Lm1 billion presently. The remaining Lm200 million odd were or are to be financed by privatisation one-off revenues.
Had we maintained stability in our expenditure and revenue patterns so that additional tax revenues went to reduce the deficit by` just Lm10 million p.a. after meeting the unavoidable expenditure creep,` a deficit of Lm110 million odd at the end of 1996 would now be Lm60 million. Economic growth of 8% pa. nominal compound would have given us a 2001 GDP of Lm 1764 millions. The deficit would today stand at comfortable` 3.42% of the GDP and we would not be talking about it except in terms of achievement.
I use the 8% factor because I firmly believe that a small nation like ours needs an annual average real growth rate of 6% which loaded to an inflation rate of 2% gives the 8% nominal growth.
The truth is that this budget is hostage to the ones before it.` You cannot achieve this sort of success if` first you get elected on a platform that the deficit identified by your predecessor was a myth, and then the first thing you do on getting elected is to` settle electoral obligations by giving generous wage increases to an over-bloated and inefficient public sector.
Next year the budget is projecting nominal growth of 5% slightly up on the 4% being registered this year. But these are nominal figures.` Translated into real figures with real inflation hovering around 4% we are actually travelling in negative GDP territory as was the case in the 3rd quarter of this year. And that was before the 11th September effect started to impact the international linkages of our economy.
Being content with a near zero real GDP growth for next year and doing little or nothing about it is indeed pitiful and should give a thumbs down to the assessment of the budget against economic growth criterion.
Other countries, that because of their size and advanced state of development are happy with 2% - 4% real growth rates, are taking active measures to stimulate growth. Particularly after the events of 11th September monetary policy has been eased reducing interest rates in successive notches to stimulate investment and consumption. And fiscal policy is revisiting Keynes to leave more spending power in the hands of the consumers.
Financial mismanagement by the same Minister who presented his 8th budget allowed him little or no room to manoeuvre with similar measures. Instead of tax rebates we get higher taxes intended to whip away a further Lm 53 million of disposable income through increased tax transfer to the government.
An in order to contain the worrying growth of the public debt which forces additional interest burden each year the government is having to resort to wholesale privatisation at a time when the scenario is more conducive for share buybacks rather than share issues.
Privatisation has become a funding exercise so much so that the government needs to net Lm47 million in the course of the next 4 weeks.` Not much room for negotiations to get a fair price!
To see the difference between macro-economically responsible privatisation and irresponsible funding motivated privatisation compare the floatation of 40% of Maltacom to the 70% sale of Mid-Med to HSBC. Maltacom today returns annual profits in the Lm15 million region as against to the Lm2 `Lm3 million that its predecessor used to generate. Under the admirable leadership of Tony Meilaq first and Maurice Zarb Adami later, it is offering products at the very edge of technology at an internationally competitive price and still delivering enhanced value to both clients and shareholders. The government`s 60% remaining equity` is worth much more than the 100% it owned prior to privatisation even at the currently depressed equity price levels.
Mid-Med privatisation` is a different affair. Government has no equity left in the Bank to enjoy the efficiency growth. In reality the Minister himself had to criticise the Bank for showing efficiency growth only in selling its parents` wealth management products rather than in assisting the local economy to revert to sustainable growth paths.` HSBC profits are showing scant growth over that of its predecessor even though it shows little social respect in establishing the price for its services.
Failure to achieve sustainable economic growth is forcing the government to fritter away privatisation revenues rather than re-invest them in new growth generating projects or debt reduction. The budget motto could well be God helps my successors that will find little or no resources to help engineer a real` economic turnaround.