Celebrating zeros

The Malta Independent

Celebrating zeros

This last week we had reason to `celebrate` many zeros. We had the third anniversary of the solemn declaration made by the then Deputy Leader of the PN, in front of the whole party elite, that had Malta not frozen its EU membership application it would have received Lm100 million from the EU.

If that figure may be too big for you too fathom that is one followed by eight zeroes or roughly` one and half times the amount government got for selling Mid-Med Bank. It is roughly equal to the amount of government`s spends on social security for 7 months.` It is more than the whole capital expenditure of the government for one year.

The seriousness of the issue aggravates when considering that this statement was made` in the peak of a premature election campaign. The confused voter was given an easily deceptive choice which made mockery of the democratic process. Alfred Sant`s persistent nagging about the magnitude of the financial problem left behind by the nationalist administration of 1992 `1996 or the PN`s re-assurance that the government finances are fine; that they will be made better by receiving an annual nine digit cheque` from Brussels so that the easy life of money no problem culture could` be extended eternally.

Time has a habit of bringing the chickens home to roost. And so are they doing as three years have not` been enough to deliver the bonanza from Brussels. On the contrary we are spending more then the little we get in our eagerness to join the EU. We have also lost the annual grant we used to get under the Italian Financial protocol which has been allowed to expire as we pretend we are now premier division and do not need to seek aid from anyone.

The public finance figures for the 7 months to July 2001 published this week bear witness to these undelivered promises. Although ordinary revenue (read taxes) are Lm19 million or 6% more than last year the deficit still increased by Lm7 million to Lm69 million. Bottom line is that in spite of being squeezed by more taxation government keeps spending it faster leaving the deficit problem largely unaddressed. An this is not the whole story as the growth in public debt indicates that there are many funded payments which have still not been properly accounted through the budget.

So this month we are collectively celebrating the gross public debt passing the psychological barrier of` one billion liri. That is one with nine zeroes behind it equivalent to 64% of the market value of all that we produced in the year 2000.

That is serious enough both in the absolute numbers level as well as in the alarming growth rate with which it is accumulating. Its debt servicing cost has doubled over the last 4 years in spite of pocketing no less than Lm120 million privatisation revenues without which the public debt would have swelled that much further.

But what is even more serious is that there exist approximately` Lm400 million which are already funded either through loans through the Treasury Clearance Fund ( the chances of recovery of which are not much better than wishing for a month of Sundays) or through Bank loans guaranteed by the government which sooner are later have to be called by their real name ` central government debt funded outside the budget which can only be serviced and repaid from central government contributions.

Whilst celebrating the zeros as they continue to roll over crushing our economy I muse that we have not even started the first step towards solving this problem ` that of recognising and admitting its magnitude!