Confusion

The Malta Independent

Confusion

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!