Friday, 26 January 2001

Operation self-destruct

The Malta Independent

Operation self-destruct

Destruction seems to be the name of the game. A lethargic administration that keeps shooting new measures from the hip without proper forward thinking regarding the consequences of its decisions,` is succeeding well to destroy business confidence, investor confidence and the personal confidence regarding the future.

The source of these problems is the chronic public fiscal deficit; a deficit of monstrous proportions, the existence of which was` negated by this administration when it was in Opposition a short 30 months ago. The inevitability of addressing` the deficit is forcing the government to slap onto the economy measures totally out of sync with its tempo. If` the fiscal position was not as acute as it is,` the economy would merit` stimuli not tax reining in. But the need to address the deficit is forcing government into the economic displeasure of imposing taxes on a fragile economy.

Measures meticulously planned whilst launching the 1994 financial services legislation with the rare agreement of the whole House of Representatives get unilaterally dismantled without as much as a pseudo consultation. Fiscal incentives to channel funds into Collective Investment Schemes locally regulated and listed which helped in no small way to repatriate exported capital get dismantled with worrying consequences. The investment flows have turned sharply negative and Maltese capital markets, already sombre under a needed but orderly market correction, slide into a value melt-down.

The destruction mode the administration finds itself in gives it enough cheek` to smile at this confusion mistaking a totally avoidable melt-down for a healthy market correction. How can anyone mistake a torrential` October storm for an April shower` Has the administration become so engulfed with its EU obsession and with the need to raise taxes faster than its insatiable appetite for more spending, that it is so insensitive to what is happening around us`

I have to` suspect so, seeing this administration determined to hold an EU referendum which I equate to` embarkation on a one-way train speeding towards self-destruction.` A referendum on this side of the election regarding EU membership is likely to lead to a negative vote probably for the wrong reasons influenced as the electorate is by the sombre` economic environment.

A no-vote for whatever reason is likely to destroy not only this government but also Malta`s chances of making` a smart choice after the next election.` This important choice needs distinct separation from our economic problems and should be taken with the benefit of an election result which ought to bring more congruence of thought on this issue between our main political schools.` This decision cannot be taken with the country divided right down the middle.

Must we continue on` operation self-destruct`

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