The Malta Independent
Two statistics issued this week by the NSO keep mounting evidence of the structural fault which has developed into our economy.
The Labour Force Survey for March 2002 show that real (as against registered) unemployment has now reached nearly 12000 exceeding 8% of the labour force and showing a 2% rise over the unemployment figure of the Labour Force Survey of March 2001. The comparison March to March avoids risk of comparing figures in different seasons. What`s more, employment reductions were mostly registered in the productive sector with the public sector continuing to act as a cushion for today`s ills whilst storing bigger problems for the future. ` It`s like a family selling the car and considering the proceeds as ordinary salary revenue and adjusting its life style as if they can continue to depend on such revenue every year.`
Then we had the public finance figures for the month of July and the first seven months of the year. Sweeping aside the scandalous allocation to ordinary revenue of Lm21 million from the privatisation of MIA, the figures continue to show mounting deficit and out of control public finances. The deficit for July alone was Lm15 million compared to Lm14.1 million for July 2001.` The deficit for the seven months to July was Lm93.5 million compared to Lm68 million last year and Lm55 million in the same period of 2000.
Add to these the evident deterioration being registered in the tourism sector and the general dearth of private sector investment in new export based initiatives and you have a formidable mix of ingredients which could lead to an economic breakdown with all the consequences of a stalling economy.
Yet what is even more worrying is government`s approach to such problems.` The Labour Force Survey is largely ignored by government that continues to focus on the more manipulative registered unemployment figures. The public deficit figures are scandalously patched up by Worldcom type of accounting which considers one-off privatisation revenues as ordinary recurrent revenue, rather than treat same as a financing item. `Nowhere in the books of economics or in human logic can one meet any instance where one can solve a deficit by hiding it.`
This is like having an aparthotel and the owner decides to sell some units to third parties and treat the proceeds of such sale as ordinary room revenue rather than proceeds from a capital sale.` It`s like a family selling the car and considering the proceeds as ordinary salary revenue and adjusting its life style as if they can continue to depend on such revenue every year.
There are three ways to solve a deficit. The most efficient and less painful is creation of economic growth so that the deficit even if not reducing in absolute terms gets smaller and more manageable in percentage terms compared to a larger economy. It can be addressed by curtailing expenditure, especially the recurrent and wasteful one which does not lead to economic growth.` And it can be reduced by revenue growth through more efficient tax collection or by increasing taxation, though this would generally work against the economic growth objective.
It is generally accepted that a true solution for solving the deficit has to be a tripod involving all three measures in a reasonably and equitably balanced way. Nowhere in the books of economics or in human logic can one meet any instance where one can solve a deficit by hiding it.
Yet the government, unable or incapable of devising a true solution to our deficit, has decided that the best way to `solve` the deficit is the Houdini way ` hiding it.
Alfred Mifsud
Friday, 30 August 2002
The Houdini Way
Wednesday, 28 August 2002
L-Anniversarju tal-Mitt Miljun
L-Orizzont
` Nhar is-16 t` Awissu li ghadda` ma kienx biss il-25 anniversarju tal-mewt ta` Elvis Presley.` Kien ukoll ir-raba anniversarju tal-weghda falza u qarrieqa tal-mitt miljun li suppost kellhom jigu kull sena mil-UE hekk kif gvern nazzjonalista hareg l-applikazzjoni ghal-shubija mil-friza.
Din kienet weghda qarrieqa li aktar minn kull haga ohra dawret l-opinjoni ta` l-elettorat biex jibdel il-gvern meta anqas minn sentejn qabel kien ta mandat qawwi lill-Partit Laburista. `Nahseb li dan biss ghandu jkun bizzejjed biex il-poplu ihossu tradut u jistenna is-siegha u l-mument biex lin-nazzjonalisti ipattilhom talli dahqu bih.`
Erba` snin ilu waqt li l-poplu kien qed jarbghel l-ghazla tieghu ghall-elezzjoni li kienet gejja,` kellu quddiemu zewg proposti. Il-proposta laburista li kienet turi il-problemi finanzjarji kbar li kellu l-pajjiz frott ta tmexxija nazzjonalista bejn l987 ` 1996 u li kienet qed toffri soluzzjoni gradwali biex il-pajjiz ifiq minn dan il-kankru; soluzzjoni li bhal medicina lill-marid ma kinetx kollha hlewwa u riha ta` fjuri. U minn naha `l ohra kellu l-proposta nazzjonalista li l-problemi finanzjarji kienu invenzjoni ta` Alfred Sant u li kif ikun gvern nazzjonalista lura fil-poter` dawn il-problemi josfru u biex inkomplu bil-festa u x-xalar kienu gejjin shan shan mitt miljun kull sena mill-UE.
Iz-zmien l-akbar gharef jghid il-qawl Malti. Nahseb li dan biss ghandu jkun bizzejjed biex il-poplu ihossu tradut u jistenna is-siegha u l-mument biex lin-nazzjonalisti ipattilhom talli dahqu bih.
Ghax dawn kienu erbgha snin fejn mhux biss il-poplu gie wicc m b`wicc mar-rejalta qarsa ta` hofra kbira finanzjarja li bilfors in-nazzjonalisti kellhom jammettu. Izda gie wicc m b`wicc ukoll ma taxxi kbar li l-gvern kellu jaghsar biex ilahhaq ma l-ispejjez bla razan tieghu inkluz dawk li qed ikollna nhallsu biex infittxu il-holma tal-UE.` Ghax mhux talli ma gewx mitt miljun izda talli qed inhallsu ahna madwar Lm20 miljun min butna kull sena bhala spejjez biex nibdlu l-istrutturi taghna biex ikunu konformi mar-regoli tal-UE.
U qawl iehor Malti jghid li t`tama l-ahhar li tmut.` Tant li n-nazzjonalisti jhobbu jbengluha billi jaghtu x`jifhem li ghalkemm ma gewx il-miljuni tant solennement imweghda erba` snin ilu biex sar zufjett mid-demokrazija, malli fil-fatt insiru membri ghandna nistennew li l-manna li ma nizlitx s`issa tibda nizla.
Kellna anke kazi fejn il-gvern qed ikollu jhallas kumpens lil setturi li qed jintlaqtu hazin, bhal bdiewa u s-sajjieda, u pprova jaghti l-impressjoni li dan il-kumpens kien gej mill-fondi ta` l-UE meta fil-fatt dawn gejjin mit-taxxi taghna u mid-dejn li dan il-gvern qed ikompli jimliena bih. `Pajjizi ohra li sal-lum qed jiehdu fondi ma tantx se jcedu malajr biex dak li jiehdu llum jibdew jehduh membri godda.`
U min jaf x`inhu ghaddej dwar il-kwistjoni tal-fondi jaf li ma jezisti l-ebda impenn dwar il-fondi li ser jiehdu il-pajjizi applikanti li ser jidhlu godda.` Dan l-impenn qed jithalla proprju ghall-ahhar u mhux mistenni li jigi mgharraf lil-pazjjizi applikanti qabel il-bidu ta` Novembru li imbaghad ikollhom biss madwar xhar biex jinnegozjaw u laghlqu il-kapitlu finanzjarju qabel is-summit ta`Copenhagen f`nofs Dicembru.
Dan huwa hekk ghaliex il-Germanja ma trid tati l-ebda impenn qabel ma jghaddu l-elezzjonijiet tat-22 ta` Settembru. U l-Germanja qed tistenna koncessjonijiet kbar minn naha Franciza dwar il-poltika agrikola komuni, koncessjonijiet li l-gvern u l-Presdient Franciz huwa kommess ma l-elettorat tieghu li ma jcedix fuqhom.
Mela l-kwistjoni ta` min u kemm se jhallas ghad trid tigi miggielda sew fl-ahhar kwart tas-sena u jkun biss imbaghad li nkunu nafu x`fondi jista jmissna u jekk dawn ikunux aktar minn dak li jkollna nhallsu bhala kontribuzzjoni lejn il-budget tal-UE.
Izda l-pronostici ma jippuntaw lejn l-ebda mitt miljun.` Tant li l-Kummissjoni qalet li hemm probabbilta` mhux zghira li minhabba il-mekkanizmi tal-pagamenti li timxi bihom l-UE hafna pajjizi godda aktarx li fl-ewwel sena sentejn ikollhom jaghtu aktar milli jdahhlu.` Tant li weghdet li biex dan ma jsehhx ghandu jinstab mekkanizmu li ta lanqas il-pajjizi membri godda jigu newtrali ma l-UE, jiehdu lura almenu kemm ikunu hallsu.` Altru milli ser niehdu xi mitt miljun!
U fuq kollox il-budget ta` l-UE iwassal biss sa l-2006. Wara din id-data iridu jsiru negozjati godda li jafu jibdlu kollox ta taht fuq. Il-Germanja ghamlitha cara li ma ma tridx tkun hi li tkompli ggor il-piz finanzjarju l-kbir. Pajjizi ohra li sal-lum qed jiehdu fondi ma tantx se jcedu malajr biex dak li jiehdu llum jibdew jehduh membri godda.
Dan tajjeb jinghad ghax il-poplu Malti ga tqarraq u mhux sewwa li jkun` hawn min jerga` jipprova jqarraq bih.
Fost ir-ragunijiet li jista` jkun hemm biex Malta tikkonsidra shubija ma l-UE zgur li l-kwistjoni tal-fondi ma ghandiex piz pozittiv u min jipprova jaghmel dan ikun qed jipprova jbiegh il-hut fil-bahar.
Alfred Mifsud
Monday, 26 August 2002
A Worldcom of Our Own
The main culprit of this is the shaken consumer confidence following the asset value losses resulting from disclosure of corporate accounting scandals.
“The NSO press release states ‘The part-privatisation of MIA has yielded Lm21.0 million in capital gains, duty on documents and dividends.’ ”
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It started with the Enron affair. The largest energy trader in the
It is on this Worldcom affair that I want to dwell. The public finance figures for January to July just released by the NSO shows that what the US public was shaken and scandalised with, what the US President and Congress have roundly condemned and prepared new legislation to tighten up on corporate responsibility, here in Malta is freely and unashamedly being practised by the government itself to misrepresent its finances.
Just as Worldcom was misrepresenting its performance by capitalising recurrent expenditure which in terms of conventional accounting standards should have been written off against income thus reducing profits or increasing the losses, the Government over here is treating as ordinary revenue one off income from privatisation of the MIA. All conventional accounting standards would require this to be treated as a financing item and not as an item of ordinary revenue.
For the non-technical let me explain the difference. Ordinary revenue is revenue which could be expected to recur each and every year such as income from income tax, social security contributions, VAT collections and income from fees, licences and other excise duties.
By including Lm21 million from the privatisation of MIA as recurrent revenue government is pretending that this one-off income will recur every year when this is manifestly not so. The NSO press release states “The part-privatisation of MIA has yielded Lm21.0 million in capital gains, duty on documents and dividends.”
Technically one could argue that capital gains, duty on documents and dividends are generally classified as ordinary revenue. But in case of MIA such income has nothing ordinary about it. This revenue results from sale at a substantial profit of the airport terminal building to the government itself which resulted in a huge artificial profit for MIA which then distributed it to government in the form of dividends, capital gains tax and duty on documents.
“The truth will eventually come to the surface and those trying to take us for a ride will have to give due account of their actions”
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If the government was using the accrual based accounting as it has long been promising, the transaction would have reflected negatively in the annual budget as the expenditure of buying the terminal goes in 100% this year whereas the set off against future rental payments would have to be made gradually over the long years of the lease period. But government is using the shortcomings of its cash accounting system to engineer deception on a grand scale.
But there is a strong message in this affair. The fact that the government has been forced to such scandalising accounting, in order not to wander too much off course from its planned financial targets, shows that government has no solutions. Hiding a deficit does not solve it.
Government tried this before in 1995 when it loaded VAT charges on Enemalta and TeleMalta to artificially bloat its own revenues whilst causing serious financial problems to these corporations that were deprived from passing on the VAT charges to the consumer. Now it is hiding the deficit by generating one-off privatisation revenues and technically structuring them to appear as ordinary revenue.
If we want to tolerate deception, well, we can solve the whole deficit like this. Enemalta has Lm44 million in revenue reserves why not ask it to pay them out as dividends and take also as ordinary revenue? Like Enemalta there are others!
The truth is the deficit is out of control. Adding back the Lm21 million scam to the reported deficit of Lm72.5 million brings the real deficit to Lm93.5 million in the period January to July 2002 compared to Lm68 million in the same period of last year and Lm55 million in 2000.
Taking July alone the true deficit for the month was Lm15 million compared to a deficit of Lm14.1 million in July of 2001. The true deficit is increasing!
These are hard facts. No Worldcom accounting is going to solve our deficit just as it did not solve Worldcom’s . The truth will eventually come to the surface and those trying to take us for a ride will have to give due account of their actions. And banks that assist the government to engineer such financial sham should not be surprised at having their credit rating checked and down-graded.
If the deficit is to be likened to the thermometer that measures the body temperature of the sick patient, government action in accounting the MIA proceeds may be likened to the doctor who puts ice near the thermometer so that it does not truly show the high temperature of his patient. In so doing it is risking the patient long term health by avoiding real solutions. Hope is that there will be time for a conscientious doctor to move in to administer the real cure and report the mal-practice of the current doctor to the medical council.
Sunday, 25 August 2002
Worldcom accounting - Maltese style
The Times of Malta
Corporate accounting scandals have shaken the USA. What was projected to be a swift recovery from a shallow recession has turned out to be a slippery slope which throws back the economy to the bottom each time it attempts to recover.
The main culprit of this is the shaken consumer confidence following the asset value losses resulting from disclosure of corporate accounting scandals.
It started with the Enron affair. The largest energy trader is the US was misreporting profits as it was hiding huge losses in shell partnerships which were not being captured by the reported financial statements.` `Hot on the heels of Enron came Worldcom. The No 2 telephone company in the US admitted that it was misrepresenting profits by capitalising recurrent expenditure.` The initial figure quoted was US$3.4 billion but this has now grown to at least US$7 billion and Worldcom had to file for Chapter 11 protection from its creditors whilst it attempts to re-structure and save its skin. `here in Malta is freely and unashamedly being practiced by the government itself to misrepresent its finances`
Malta now has its own Worldcom. The public finance figures for January to July` just released by the NSO shows that what the US public was shaken and scandalised with,` what the US President and Congress have roundly condemned and prepared new legislation to tighten up on corporate responsibility, here in Malta is freely and unashamedly being practiced by the government itself to misrepresent its finances.
Just as Worldcom was misrepresenting its performance by capitalising recurrent expenditure which in terms of conventional accounting standards should have been written off against income thus reducing profits or increasing the losses, the Government over here is treating as ordinary revenue one off income from privatisation of the MIA. All conventional reasoning` would require this to be treated as a financing item and not as an item of ordinary revenue.
For the non-technical let me explain the difference. Ordinary revenue is revenue which could be expected to recur each and every year such as income from income tax, social security contributions, VAT collections and income from fees, licences and other excise duties.
By including Lm21 million from the privatisation of MIA as recurrent revenue government is pretending that this one-off income will recur every year when this is manifestly not so.` The NSO press release states `The part-privatisation of MIA has yielded Lm21.0 million in capital gains, duty on documents and dividends`. ` The truth is the deficit is out of control`
Technically one could argue that capital gains, duty on documents and dividends are generally classified are ordinary revenue. But in case of MIA such income has nothing ordinary about it. This revenue results from sale at a substantial profit of the airport terminal building to the government itself which resulted in a huge artificial profit for MIA which then distributed it to government in the form of dividends, capital gains tax and duty on documents.
This is an engineered transaction which for its modality challenges for ingenuity in deception even the Worldcom executives under charge of corporate irresponsibility. And to make sure that the structured deal is totally wrapped up in deception the government has paid nothing for the purchase of the Terminal Building on which so much paper profit has been made. If it had paid any funds these` would have shown under the Capital Expenditure Vote. Instead this expenditure will be offset against future rental payments of the said terminal which has been leased back to the MIA. `No Worldcom accounting is going to solve our deficit just as it did not solve Worldcom`s`
If the government was using the accrual based accounting as it has long been promising, the transaction would have reflected negatively in the annual budget as the expenditure of buying the terminal goes in 100% this year whereas the set off against future rental payments would have to be made gradually over the long years of the lease period. But government is using the shortcomings of it cash accounting system to engineer deception on a grand scale.
But there is a strong message in this affair. The fact that the government has been forced to such scandalising accounting, in order not to wander too much off course from its planned financial targets,` shows that government has no solutions.`
The truth is the deficit is out of control. Adding back the Lm21 million scam to the reported deficit of Lm72.5 million brings the real deficit to Lm93.5 million in the period January to July 2002` compared to Lm68 million in the` same period of last year and Lm55 million in 2000.
Taking July alone the true deficit for the month was Lm15 million compared to a deficit of Lm14.1 million in July of 2001. The true deficit is increasing!
These are hard facts. Hiding a deficit does not solve it. No Worldcom accounting is going to solve our deficit just as it did not solve Worldcom`s. Like Worldcom such practices might take us to the equivalent of chapter 11.
Alfred Mifsud
The Blessing of Cycles
The Malta Independent on Sunday
The Bible tells us that beyond this life there are no cycles; just a permanent and eternal state of happiness or despair.
On earth, cycles are a way of life not least in economic terms.` The economy passes through cycles of boom or bust that are often unavoidable. Good economic management is meant to manage the cycle to make downturns shallow and short whilst retaining a consistent upward projection of the growth line.` It is not meant to avoid cycles altogether acknowledging that this is well neigh impossible and indeed unhealthy.
In economic terms downturns are essential to bring operators down to hard reality with feet back on the ground from the risky highs that euphoria often carries the economy and the financial markets.` Human weakness tends to assume that tomorrow is a straight line extension of today and this leads to over-consumption and over-investment at times of boom and contra cycles at times of bust to bring about the necessary equilibrium. `Reality is the PN government has been trying to extend its tenure of power by generating artificial and unsustainable feel-good factor translatable into electoral popularity, but only at the expense of the long term health of the economy and its growth capacity`
Governments use a mixture of fiscal and monetary policy to smoothen the cycle.` In order to ensure that politicians with an eye on the election do not engineer artificial booms to generate false and unsustainable feel-good factor for electoral popularity, governments world-wide have ceded monetary policy operations to autonomous national or supra-national central banks.` These act as a counter-weight on the ability of governments to use fiscal policy in an economically de-stabilising manner for short term political gain.
In Malta following a period of unending strong growth between 1987 and 1994 the economy has been under-performing ever since with low growth rates, an explosion in national debt and structurally obstinate fiscal imbalances.
Why can`t we get ourselves to healthy economy cycles that make a full turn over a period of four or five years and registering high average annual real growth rate of 5% or more when measured from peak to peak`
Reality is the PN government has been trying to extend its tenure of power by generating artificial and unsustainable feel-good factor translatable into electoral popularity, but only at the expense of the long term health of the economy and its growth capacity. `they cannot just realise that they are now dangerously mortgaging our economic future, perilously prejudicing our financial structures through their uncontrolled spending`
In order to avoid the cycle downturn after 1992, the Minister of Finance has exploded the public sector deficit to extend artificially the sensible growth of the first PN legislature of 1987-1992.` This was done at the expense of structural deficit in public finances which has increased the national debt five-fold in the last ten years and doubled it in the last five years.
The absence of timely downturns has negated operators of salutary reminders that nothing is free, that everyday is a new challenge in the fierce competition of the globalised world,` and that there is always someone out there willing to eat our lunch if we remain complacent,` thinking that we can win tomorrow with the same game-plan that brought yesterday`s victory.
Politically the absence of cycles has brought even worse. Fifteen years of nearly uninterrupted power, cosily massaged by friendly media that tries to justify and camouflage all government`s weaknesses rather than expose them for` proper addressing, has blinded those in power so much` that they cannot just realise that they are now dangerously mortgaging our economic future, perilously prejudicing our financial structures through their uncontrolled spending, and gradually reducing the quality of life of the average Maltese back to third world standards.
`The fact that the Labour government of 1996 was eaten for lunch by the same power latitude it allowed in the hands of PN appointed executives, ending its life in the short space of 22 months, made it easy for confidence and complacency to turn into arrogance and abuse.` Fifteen years of nearly uninterrupted power has fossilised cosy power sharing back scratching networks that has reduced` the country into` a continuous game of let`s pretend; pretending that the economy is doing well when in fact it is just under-performing and risking an implosion; pretending that we have a healthy democracy when in fact it is resulting that there is a price for everything, from presidential pardons to lenient court sentences.
When the political cycle turned in 1996 something strange happened to render the change sterile.` Labour kept in position most of the PN appointed executives, from the Permanent Secretary at the OPM to the Commissioner of Police, thus denying the possibility of fresh hands exposing weaknesses and abuses which tend to set in with increased incidence in the second consecutive legislature.
The fact that the Labour government of 1996 was eaten for lunch by the same power latitude it allowed in the hands of PN appointed executives, ending its life in the short space of 22 months, made it easy for confidence and complacency to turn into arrogance and abuse.` The forced resignation of the Commissioner of Police, the Chief Justice and a Judge in the space of 12 months bear witness.
The country badly needs to bring itself in line with normal cycle trends both economically and politically.` Failure to do so will land us with pathetic arguments as that featured editorially by The Times this week.` It argued that Labour should not criticise the complicated intrigues between institutional power bearers and the criminal drug world, as probably it suspects, without any reasonable basis let alone evidence, that some of its predecessors could have been doing something similar between 1971 and 1987. Oh how we need a turn of the cycle!
Alfred Mifsud
Ewropa ta` Konvenjenza
Il-Kullhadd
In-nazzjonalisti juzaw il-kwistjoni ta` l-UE bhala konvenjenza.
Immangina kieku ma tezistix il-kwistjoni dwar l-UE. Kieku in-Nazzjonalisti resqin lejn elezzjoni generali bla ma ghandhom xejn x`juru.` Il-weghdiet li ghamlu fallew.` In-nies illum jafu sew li l-gvern nazzjonalista ghejja u ma ghandux soluzzjonijiet vera ghal problemi li holqu.
In-nies imdejqin bl-istess ucuh fil-poter. Dawn hsiebhom mhux biex joholqu l-gid u jmexxu lil pajjiz `l quddiem, izda biex jikkontrollaw il-mezzi ta` komunikazzjoni halli jimmipulaw l-opinjoni pubblika. `Kieku ma tezistix il-kwistjoni ta` l-UE kieku ghall-elezzjoni li gejja in-nazzjonalisti lanqas jibdew u jistghu jippreparaw ghal post fl-oppozizzjoni.`
Izda in-nies l-ugiegh qeghdin ihossuh.` L-ebda manipulazzjoni ma tikkonvinci lil min qed jinqaras li dak li qed ihoss mhux ugiegh izda dliek tal-blazmu. Jekk il-mara tad-dar mhux isserviha l-paga u ma tistax tlahhaq mal-hajja ma ghandha bzonn xejn u hadd biex jikkonvinciha mod iehor ghax din esperjenza li tghaddi minnha kuljum.
Jekk iz-zghzagh mhux isibu xoghol jew ikollhom jaccettaw xoghol li ma hux addattat ghal l-istudji li jkunu ghamlu l-ebda propaganda mhu ser tikkonvincihom li l-pajjiz miexi `l quddiem u qed joffrilhom opportunitajiet godda.
Jekk il-familji li kienu vvutaw mill-gdid ghan-nazzjonalisti ghax emmnuhom` li ha jnaqqsu il-piz tat-taxxi issa qed jerperjenzaw il-kuntrarju.
Kieku ma tezistix il-kwistjoni ta` l-UE kieku ghall-elezzjoni li gejja in-nazzjonalisti lanqas jibdew u jistghu jippreparaw ghal post fl-oppozizzjoni. Ma ghandhom xejn x`juru hlief zewg muntanji.` Muntanja ta` dejn li qed tgherreq il-pajjiz `l isfel u ma thallihx jizviluppa hekk kif il-flus tat-taxxi li nhallsu flok jintuzaw ghall-izvilupp jintuzaw biex semplicment jithallas l-imghax li l-ispiza tieghu dejjem tieghla.` U muntanja ta` skart ta` min ma gharafx jahseb minn qabel biex jilqa ghal immaniggjar sew ta` l-iskart.` Min ma gharafx jippjana` biex dan kemm jista jkun jigi separat u riciklat halli ma johloqx problema ta` fejn ser jitpogga fuq gzira tant zghira li tmur fejn tmur qatt ma tkun wisq il- boghod minn fejn jghixu n-nies. `Issa z-zmien li nitkellmu fuq il-problemi veri tal-pajjiz halli fl-elezzjoni li gejja ma nhallux lin-nazzjonalisti juzaw il-kwistjoni ta` l-UE biex jahbu dnubhom halli il-poplu ma jiggudikahomx.`
Il-muntanji jidhru. U zewg muntanji dizastruzi bhal dawn jidhru u jinhassu u l-ebda propaganda ma tikkonvinci il-poplu mod iehor.
Huwa ghalhekk li in-nazzjonalisti iggranfaw ma l-UE u qed jippuntaw il-futur taghhom fil-poter fuq din il-kwistjoni. Tassew li n-nazzjonalisti saru gvern li jahdem fuq issue wahda , dik ta` l-UE, u xejn izjed.` Il-kumplament ma jinterrsahx ghax ma ghandux soluzzjoni ghal problemi li holoq.
`Is-soluzzjoni in-nazzjonalisti qed ifittxuha biss mill-UE ghax bhal ma hija t-tradizzjoni taghhom iridu lil barrani jigi hawn u jmexxina huwa ghax huma mhux kapaci jmexxu u mhux lesti li jhallu lil Partit labursta jmexxi huwa. Jippreferu li nitmexxew mil-barrani milli minn gvern laburista.
Ghalhekk il-kwistjoni ta` l-UE ghal gvern nazzjonalista hija` diversiv effettiv li jaljena n-nies mill-problemi ta` kuljum li holqu huma stess.` Iridu li meta l-poplu jigi biex jaghzel gvern gdid ma jiggudikax lin-nazzjonalisti fuq id-dizastru tat-tmexxija taghhom izda jiggudikahom fuq kemm ser tmexxina ahjar l-UE u kemm huwa skond il-moda li nissiehbu ma l-UE.
Ikun zball li l-poplu Malti jerga` jidhol mill-gdid f`nasba bhal din. L-UE hija importanti ghalina izda mhux is-soluzzjoni ghal problemi kollha taghna.` Is-soluzzjoni ta` dawn trid tigi min gewwa.
La l-Partit Laburista li jirraprezenta mill-anqas nofs il-poplu jidhirlu li hemm relazzjoni ahjar ma l-UE li tista` twassal ghal ghixin ahjar u ghal protezzjoni aktar qawwija tas-sovranita` taghna, allura tajjeb li l-ewwel il-poplu Malti jesplora din it-triq. Is-shubija fl-UE, kontra dawk li jghid min irid jizvija, mhux xi trenn li jekk ma nitilghux fuqu issa ma nergghu qatt ikollna cans insibu trenn` iehor li jwassalna s`hemm jekk xi darba bhala poplu maghqud niddeciedu li jaqbel immorru hemm.
Il-poplu malti jehtieg infehmuh li hafna mid-dixxiplina li timponi fuqna l-UE nistghu naghmluha ahna stess bi gvern serju labursta.` B`hekk niehdu il-mizuri biss li hemm bzonn u mhux indahhlu r-regoli kollha ta` l-UE li bosta minnhom mhux addattati ghar-rejaltajiet ta` pajjizna izda li jkollna obbligu li nattwawhom ghax hekk jikkmandana haddiehor.
Issa z-zmien li nitkellmu fuq il-problemi veri tal-pajjiz halli fl-elezzjoni li gejja ma nhallux lin-nazzjonalisti juzaw il-kwistjoni ta` l-UE biex jahbu dnubhom halli il-poplu ma jiggudikahomx.` Ghad jasal zmien meta l-UE niddiskutuha bhala progett serju u mhux bhala konvenjenza kif iridu n-nazzjonalisti.
Alfred Mifsud
Friday, 23 August 2002
Cheeky and Offensive
The Malta Independent
The government has not only eaten the cake of our moral values but it wants to make us believe that the cake is still intact.` This is cheeky.
The friendly media, editorially, is taking it against Labour opposition for discussing the wider implication of what led society to harbour drug related corruption at the high level of its judicial corps. In so doing it is abdicating its role to defend moral values of society. This is offensive.
Government wants us to believe that the case that led to the impeachment motion of two judges and their eventual resignation was an isolated digression from the high moral ethics that are still practised throughout society. It maintains that we ought to be satisfied that our security systems effectively shielded society from such abuse by bringing the culprits to justice without fear or favour regarding their high offices. `Government wants us to believe that the case that led to the impeachment motion of two judges and their eventual resignation was an isolated digression from the high moral ethics that are still practised throughout society.`
Governments wants this case not only to serve as an effective diversion from its pathetic record on the administrative and economic fronts even during the summer, but also to claim merit for having effective checking systems over high office abuse.
It also expects the Opposition to join it pretending that the resignation of the two judges and criminal records brought against those involved in this earth shaking scandal, restores the state of complete normality to the democratic systems and institutions of the country. The friendly press hold it against Labour for daring to think otherwise.
Those of us who walk the streets know that in their large majority people suspect otherwise.` They suspect that the case is exceptional only in the fact that it was brought to the surface. This thanks to strong evidence put together on the personal initiative of a few investigating officers who worked secretly until they could present solid evidence making it impossible for the usual back scratching network of power-sharers to bury the case and continue regardless. `In any other civilised country a case like this would have brought in as a minimum the immediate resignation of the Minister of Justice`
At level zero people look back to other cases which in the past came to the surface involving drug related crime and reflect how the hard work and dedication of a few investigating officers was nullified, at the expense of society, by shady presidential pardons, eye-brow raising jury procedures and judgements, and easy escape from Malta of people who would have had something quite interesting to tell about the workings of the drug networks.
For those us who are not prepared to bury their head in the sand,` the current case which is now proceeding in its criminal dimensions after the judges bowed to public pressure to resign rather than face impeachment, is just a symptom of much else which has been going on under the surface eroding the moral values of society.
The opposition not only has a right to speak on such wider issues which give a background meaning to the particular case in point, but it has a duty to do so.` Rather than holding it against Labour for interpreting things in a context without in any way prejudicing the right of fair trial, the media should criticise and object to the evident attempts being made by people in high places to minimise the impact of this scandal and restore a false state of normality.
In any other civilised country a case like this would have brought in as a minimum the immediate resignation of the Minister of Justice and the reconvening of parliament to discuss with urgency the state of affairs of our judiciary systems with a motion of either no confidence brought by the opposition or a vote of confidence sought by the government. Failure to do so makes me wonder whether we can still rightly claim to be civilised.
Alfred Mifsud
Monday, 19 August 2002
Getting Our Act Together in Tourism
Compare for example tourism to the activity of one of the major industrial units, ST Microelectronics. ST exports' gross value is probably more than tourism. But the value – added which is left within the economy bears no comparison. ST’s cost inputs have a high content of imported raw material that brings down the value added to a small percentage. Furthermore, the profits of ST are distributed to its foreign owners bringing down further the value added that actually stays within the economy.
“One cannot even argue that the government has wrong policies for tourism. The fact is the government has no policy for tourism”
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Given this crucial importance of the sector for the well-being of the economy it is quite incredible how the government seems to care pretty little about the well-being of the industry. I remember in the 1995 –1996 period when I was vice-president of the MHRA I got a first hand account of how the government had little priority for tourism. When we were making the strong point that taxation of the industry would just scare away the business and we strongly argued that the VAT rate on tourism should not exceed 5%, government just ignored our pleas and went on regardless to engineer a contraction of the industry.
It’s the same today. One cannot even argue that the government has wrong policies for tourism. The fact is the government has no policy for tourism, period. We seem to be going in different directions at the same time which essentially means we are going nowhere, just digging a hole in the ground beneath us as we run on the spot.
Perhaps, if I cite the deterioration in the product quality, the uncontrolled development going on next to tourist accommodation facilities, the dirt and decadence in most areas of the country I could be written off as a middle-aged moaner with a political axe to grind. So I would rather reproduce a letter written by a British tourist and featured in The Times of August 15th to do the job far more effectively than I ever could.
“As a tourist just returned from
“Our tourist message has to shift to something like this ‘what you can see in
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When I went there on a boat trip last week the bay was choked with vessels and conditions ashore for those trying to swim and sunbathe resembled a penguin colony in the breeding season.
This lovely spot is currently a disgrace. If
How about providing a few more safe access points to the water and rubbish bins?”
1. The product has to be right. Before spending millions on advertising and promotion we have to get the product right. The private sector has invested and is still investing in hotels, restaurants and facilities. But the government, attaching very low priority to tourism, has left the general public environment a disgrace even in the most beautiful spots like the Blue Lagoon.
2. We need to attach more priority to quality rather than quantity. We do not have the infrastructure to handle large number of mass market tourists so we have to be selective and go for the more value added tourist whilst keeping the numbers within the limits that do not prejudice the quality of our product. It is much much better to get a tourist who spends Lm100 a day for 3 days than a student who spends Lm20 a day for 2 weeks.
3. All operators need to be made more conscious of defending the tourist product and licensing should go hand in hand with strict quality control procedures including mystery shopping and spot checks. No use licensing more craft to dump tourist in a single spot if the facilities are not there to give true value for money to clients.
Labour government of 1996 –1998 gave a living example of how quickly can the market respond to injection of serious management giving co-ordinated direction to the industry. Bugibba was turned from a dump to a shiny tourist resort in the space of a few months and that for just about the same cost that this government has invested in the Sliema promenade in a project which seems to know no end.
I maintain that even on tourism alone our country can earn a decent living in a globalised world. And we can do this not by competing with the beaches and facilities which much larger countries can provide with abundance and lower cost.
We must discover the advantages given to us by our smallness and offer a product that is unmatched by competition. Our tourist message has to shift to something like this “what you can see in
There is a market waiting for us to tap into with this message which will double the value added from tourism in the space of five years. If instead we continue to increase our cost base and discount the price as we continue selling to the mass market we will have to be witness to the slow demise of the industry upon which our economy so critically depends.
These are the solutions that a fatigued government cannot even be bothered to think about absorbed as it is in this August lethargy which is producing one of the worst tourist seasons of the last ten years.
Ittra lill-Editur tan-Nazzjon
In-Nazzjon
L-Editur, In-Nazzjon, Stamperija Indipendenza Pieta`
Sinjur,
Fl-editorjal tal-lum int ghamlit l-argument li Gvern Nazzjonalista huwa aktar kapaci minn gvern laburista ghax biex 40% tal-MIA ghal Lm40 miljun filwaqt li gvern Laburista kien stima li jdahhal Lm12 il-miljun minn bejgh bhal dan.
Ippermettili nghaddi riflessjoni.` Jekk il-prezz ta` 40% tal-MIA huwa Lm40 miljun dan iffiser li l-kumpanija MIA kollha tiswa Lm100 miljun.` Meta l-gvern Nazzjonalista biegh 67% tal-Mid-Med Bank ghal Lm71 miljun il-Bank kollu kien stmat li jiswa Lm106 miljuni. Il-prezz tal-MIA aktar jikkonferma kemm inbiegh b`irhis il-Mid-Med meta dan jaghmel profitti erba darbiet tal-MIA. U dan mhux x`kien ser jaghmel bhal fil-kaz tal-MIA taht gvern laburista,` izda ta` x`ghamel fil-fatt gvern nazzjonalista!
Issa kemm inbiegh verament 40% sehem tal-MIA ghad irridu naraw meta jigu ppublikati d-dokumenti.` Minn dak li ntqal waqt ic-cerimonja jidher li prezz huwa Lm20 miljun fil-waqt li l-Lm20 miljun `l ohra huma distribuzzjoni ta` qlieghli ga sar, taxxa fuq il-qliegh u pagament bil-quddiem tal-kera tal-bini ta` l-ajruport. Ma nehodiex bi kbira jekk fil-kontijiet pubblici naraw biss Lm20 miljun bhala dhul mil-privatizzazzjoni u l-Lm20 miljun `l ohra jittiehdu bhala dhul ordinarju avolja dan dhul ta` darba.
Ghalhekk wiehed ghad irid jekk il-figurata` l-istima ta` Lm12 il-miljun li kont ghamilt jien fi zmien gvern laburista tridx titqabbel ma Lm20 miljun jew ma Lm40 miljun.
U x`inhu il-paragun difficli jsir. Ghax filwaqt gvern laburista kien qed izomm f`idejh 60% u l-kontroll tal-kumpanija, gvern nazzjonalista ma l-40% ta` l-MIA ghadda wkoll il-kontroll tal-kumpanija.` U l-kontroll jiswa l-flus u trid thallas ghalih. Specjalment jekk jaghtik id-dritt li taghmel Management Agreements u Technical Services Agreements` li tithallas taghhom indipentement mil-qliegh tal-kumpanija, bhal ma jidher li sar fil-kaz ta` l-MIA.
Fil-kaz tal-bejgh tal-Mid-Med Bank il-poplu malti ma thallasx kif jixraqlu meta mal-bejgh ta` l-ishma ghadda l-kontroll totali tal-bank.` Almenu jidher li` tghallimna xi haga u ma garax l-istess` fil-kaz ta` l-MIA ghax il-gvern gab prezz li jirrifletti it-telf tal-kontroll ta` l-MIA.` Izda mhux ragunat tqabblu ma prezz li stenna gvern laburista meta kien se jzomm f`idejh il-kontroll ta` l-uniku ajruport li ghandna Malta.
Din ghazla strategika li tmur lil hinn min kunsiderazzjoni ta` prezz. Perzwas li z-zmien ghad juri li l-istrategija ta` gvern laburista li jzomm kontroll dirett ta` l-ajruport kienet tkun ahjar minn strategija fejn l-uniku ajruport taghna issa qed taht il-kontroll tal-barranin.
Tieghek,
Alfred Mifsud
Sunday, 18 August 2002
Kuntrast
Il-Kullhadd
Dan Awwissu gab kuntrast qawwi minn zewg avvenimenti differenti li nhoss li ghandi nikkummenta fuqhom.
Nibdew bil-pozittiv. Bhalissa ghaddejja il-maratona tal-Kerygma.` Perswaz li nerghu niksru ir-rekord ta` flus li jingabru ghal kawzi ferm nobbli. Izda l-aktar li joffri sodisfazzjon huwa kif il-pajjiz jinghaqad wara dan l-avveniment. Kif mijiet ta` zghzagh jiddedikaw il-vaganzi tas-sajf taghhom biex jghinu lil min ma jistax jghin ruhu. Kif il-mexxejja tal-pajjiz jinsew differenzi ohra u jahdmu ghal kawza komuni. Kif nies li normalment ma jfittux lil xulxin jahdmu flimkien biex igibu is-success tal- maratona tal-Kerygma. `Lill-Partit Laburista Verheugen jarah bhala ostaklu li jista` jtellfu dak li huwa mhallas li biex jakkwista.`
U donnu kullhadd jivvinta modi godda kif jista jghin. Is-sena `l ohra shabi Daniel Abela u Winston Zahra ghamlu girja maratona biex jigbru l-fondi b`mod differenti. Regghu ghamluha din is-sena. Izda din is-sena kellna wkoll novita`. Il-club tar-regatta tal-Marsa gietu l-ideja li biex jigbor fondi jaghhmel qadfa minn Pozzallo sal-Port il-Kbir fuq dghajsa normali tal-qdif ta` bl-erbgha li tiehu sehem fir-regatta. `Tnax il-siegha ta` qdif kontinwi biex jigbru il-flus ghal kawza tal-Kerygma.
Prosit lil qaddiefa kollha izda zgur li ta min isemmi partikolarment lil qaddiefa` Geraldu d-Dajdu u Mifsud` li qadfu tul it-tirq kollha bla waqfien ta` xejn.
Wiehed jawgura li matul din il-gimgha li tkun ghada ghaddejja din il-maratona il-poplu Malti jirrikorri bi hgaru halli fit-tmiemha nergghu nkunu kburin li ahna Maltin b`qalb tad-deheb.` Nittama` wkoll li d-direzzjoni televiziva toqghod aktar attenta mis-sena `l ohra biex ma nhallux il-parteggjanizmu poltiku jisfratta xoghol kbir li jkun sar bil-qalb minn tant voluntiera. Min huwa nkarigat jaf x`jien nghid u m`hemmx ghalfejn intawwal.
Izda din il-gimgha iddisgustajt ruhi b`dak li kellu xi jghid dwarna Gunther Verheugen , il-Kummissarju ghat-Tkabbir ta` l-UE. Dan Verheugen xogholu huwa li l-pajjizi li applikaw jidhlu membri billi joqghodu ghal dak kollu li tghid l-UE, ma joqghodux jitolbu derogi u ezenzjonijiet halli maljar kemm jista jkun l-UE tikber u tersaq lejn il-mudell tal-Federazzjoni jew kon-federazzjoni fejn ic-centru jikkmanda u fejn il-membri, specjalment dawk boghod mic-centru u dawk zghar u b`vuci dghajfa,` jobdu bla paroli. ` Huwa l-gvern li sar gvern ta` tema wahda, li nesa ghal kollox il-problemi veru ta` kuljum tal-poplu.`
Verheugen ovvjament mhux kuntent li f`Malta hawn oppozizzjoni li tghid car u tond li ma taqbilx li pajjizna jsir membru fl-UE, certament mhux taht ir-regoli prezenti li mhux addattati ghal pajjizi zghar bhalna. Lill-Partit Laburista Verheugen jarah bhala ostaklu li jista` jtellfu dak li huwa mhallas li biex jakkwista.
U biex jasal ghal finijiet ta` mohhu Verheugen din il-gimgha uza attici xejn puliti u xejn diplomatici. L-ewwel qal li jekk Malta taghzel li ma tissihibx fl-UE allura ser tibqa wahedha bicca gzira bejn l-Ewropa u l-Afrika bla rilevanza u bla ma tista tikkompeti fil-globalizzazzjoni dinjija.` Kwazi kwazi ried jghid li wahedna immutu bil-guh.
Dawn argumenti li smajnihom qabel anke meta Malta kienet ser tiehu l-indipendenza kif ukoll meta konna ser naghlqu il-bazi.` U kull darba iz-zmien wera proprju l-oppost. Li l-pajjiz mar l-ahjar meta kellna rajna f`idejna u mhux meta hallejna lhitna f`idejn haddiehor. Sta ghal poplu Malti issa jekk jitghallimx mill-esperjenza diretta ta` l-ahhat sittin sena, minn` meta konna ghoddna mitna bil-guh fil-gwerra li ggiliedna ghal haddiehor, jew jismax minn nies bhal Verheugen li qed jistedinna nidhlu parti f`organizzjoni fejn ma nkunu nikkmandaw xejn u nkunu irridu naghmlu kif jordnawlna u nispiccaw nittalbu ghal dak li bi dritt huwa taghna.
U mbaghad Verheugen qalilna wkoll, u hawn dhal f`materji domestici li kien ikun aktar prudenti jekk jibqa` barra minnhom, li l-Partit Laburista sar oppizzjoni li ghandha biss tema wahda; dik li twaqqaf milli l-Gvern Nazzjonalista jdahhal lil Malta fl-UE.
Din gidba hoxna. Huwa l-gvern li sar gvern ta` tema wahda, li nesa ghal kollox il-problemi veru ta` kuljum tal-poplu. L-oppozizzjoni ma tharisx lejn l-UE bhala s-salvazzjoni ta` kollox. L-oppoizzjoni Laburista anzi trid li l-attenzjoni principali tinghata lil problemi rejali u interni tal-pajjiz.` Lin-nuqqas ta` kompettivita`, lill-iggamjar fl-ekonomija, lill-izbilanc pubbliku, lin-nuqqas ta` opportunitajiet godda ta` xoghol, lill-ambjent, u lil-faqar gdid li qed jinbet` kif is-servizzi socjali qed jitnaqqru.
Altru li l-Partit Laburista mhux Partit li jesizti biss biex jimblokka lill-gvern milli jdahhal lil Malta fl-UE. Il-Partit Laburista jemmen li l-ewwel ghandna nkunu ahna stess li nsolvu il-problemi li qed jifnuna u mbaghad nirragunaw maz-zmien kif nizviluppaw ir-relazzjoni taghna mal-UE.` Li hu zgur huwa li fuq ir-regoli prezenti ma jaghmilx sens li nfittxu shubija shiha u ghandna nfittxu relazzjoni ohra qrib li ma ddewwibx is-sovranita` taghna u ggelghlna nittalbu biex jaghtuna dak li akkwistajna ga fl-ahhar sittin sena. Ovvjament din ma togghobx lil Verheugen izda ahna mhux qedin biex noggghbuh, izda biex nogghbu lil-poplu Malti li lejh u lejh biss hija l-lejalta` taghna.
Alfred Mifsud
Friday, 16 August 2002
No Mr Verheugen
The Malta Independent
Since time immemorial this country has used its geo-strategic position to benefit its economic development.
Sixty years nearly to the day, it was only the hand of God that saved us from surrender to the Axis forces as a supply convoy limped into the grand harbour to save our ancestors from starvation.
During these sixty years our country changed more than it had changed in six thousand years ` mostly for the better, environmentally for the worse.
We gained independence, initially a nominal one, but eventually real and we prospered. We did not keep the pace with benchmark countries like Cyprus and Singapore who were more determined and focussed in their approach, but we are still a million times better than what our fathers were used to. `It is the government that has become a single issue government at the expense of everything else.`
The question is where do we go from here` Which model can best guarantee a rate of sustainable development`
EU Commission for Enlargement Gunther Verheugen has no doubt. Unless we form part of an enlarged EU, common foreign and security policy and all, we will just be a small island on our own between Europe and Africa without any role in international affairs and ill equipped to face the challenges of globalisation.
Pity he fails to explain why certain EU regions, especially those nearest to us, are not doing particularly well in the globalisation race even though they have a long history of EU membership.
This is not to bad-mouth the EU. Whatever model we choose, strong collaboration with the EU in trade, commerce, education, culture and other fields remains a common factor. There is life after both as EU members or as strong trading partners. It mostly depends on us, on our ability to make the hard choices in time rather than continue to burn up resources uselessly. `Labour is not a single issue opposition and Malta will not become irrelevant outside the EU.`
But even elementary logic shows that small economic units can compete successfully with large units through differentiation not emulation. Through the advantage of moving with agility to grasp the opportunities as they arise we can beat on speed the larger economies often unable to move as fast because of their sheer size.
Our ability to differentiate, the agility to move faster than the acquis communitaire would otherwise permit, could lead to better prosperity provided we can put behind us the parochial mentality of divisiveness and approach the future as one nation.
And to prove that he is detached from local realities Mr Verheugen professed his believe that the Labour Party has become a single issue oppositon ` that of obstructing Malta`s accession to the EU. How dare he say so when the Leader of the Opposition recently went as far as proposing a postponement of the EU debate while the country focuses with unity on the more relevant and pressing domestic issues which the government has neglected` It is the government that has become a single issue government at the expense of everything else.
No Mr Verheugen, you are wrong on both counts.` Labour is not a single issue opposition and Malta will not become irrelevant outside the EU. The strategic importance, which sixty years ago caused us near starvation and which made Britain beat all odds to preserve its central Mediterranean flagship, will continue to see to that.
Alfred Mifsud
Thursday, 15 August 2002
Brazil is not Argentina but still risky
The Times of Malta
Following the shock of Argentina`s default on its domestic and international financial obligations, investors, including local ones, were shocked by the sharp fall in market value of Brazilian bonds.` Yields rose to strong double digits normally associated with borrowers with very strong risk of defaulting.
Benchmark EUR bond 9.5% due in 2011 touched a low of 36 yielding around 30% p.a. till maturity. Even on the morrow of IMF stand by credit line bailout announced on 7th August, the bond was trading at 53 with a yield to maturity of over 23% p.a.
So while the pressure on Brazil has been eased by the IMF re-assuring intervention in this run-up` period for the Brazilian Presidential elections, it is by no means assured that Brazil will avoid a default or that Brazilian bond prices will return anytime soon to their healthy start of year price levels. `As for us it is worth noting that whilst we are far from knocking on IMF doors, and whilst our foreign exposure position is stable, in many other economic indicators (public deficit, economic growth, ratio of public debt to GDP) we are performing worse.`
Yet Brazil should not present the same risks as Argentina. Whilst its economy has seen the growth rate decline form 4.4% in 2000 to 1.5% in 2001 it did not contract for three successive years as experienced by the implosion of Argentina`s economy.
Whilst Argentina was having problems reigning in public expenditure and cutting public deficit to avoid the need for its government to continue borrowing, Brazil has been running a public account surplus. The only reason why the public debt increased in relationship to the GDP was because of the downward floatation of the Brazilian Real.` Public sector debt is still below the 60% of GDP generally accepted for good-housekeeping by EMU standards, and only 20% of this is held abroad although a further 20% is held locally but linked to the US currency.
Furthermore Brazil`s economy has not been living with a totally artificial rate of exchange as was Argentina`s experience prior to its implosion, whilst following totally unrealistic attempt to keep parity between the Argentine peso and the US dollar.
Consequently Brazil is much more worthy of IMF support than Argentina. It is therefore heartening to see that IMF brushed aside calls from moral-hazard fanatics and signified it is ready to continue supporting Brazil with its macro-economic adjustment project.
The newly elected Brazilian president ought to show commitment to sound adjustment policies, without which IMF support will vanish leading to the certainty of default on the substantial accruing obligations of its maturing debt. `It is only the savings culture bequeathed to us by our forefathers and the deep tradition of faith and confidence in our financial system that makes financing the deficit and the debt much less painful than Brazil.`
This is not the same thing as saying that IMF policies are a perfect solution or that they are socially fair or just. Only that without IMF support under whatever conditions they think appropriate, Brazil will go the Argentina route.
It is this uncertainty which will keep Brazil bond prices soft until there is an elected president that makes a credible commitment which will secure the continued support of the IMF for the economy to regain its competitiveness, moving to higher growth rate and addressing the 4.4% current account deficit on its balance of payments.
Failing this Brazil will default on its debt obligations sooner rather than later.` It is a risk not worth taking not only for Brazil, but for the world economy.
The IMF has shown its commitment to avoid the risk. It is hoped that newly elected Brazilian President will do the same so that Brazil will take the road to Mexico rather than to Argentina.
As for us it is worth noting that whilst we are far from knocking on IMF doors, and whilst our foreign exposure position is stable, in many other economic indicators (public deficit, economic growth, ratio of public debt to GDP) we are performing worse.` It is only the savings culture bequeathed to us by our forefathers and the deep tradition of faith and confidence in our financial system that makes financing the deficit and the debt much less painful than Brazil. But this should not be abused or stretched, as what took centuries to build will strap in an instant.
Alfred Mifsud
Monday, 12 August 2002
Wake up NAO
Maltastar
The National Audit Office (NAO) has an extremely important role to play in maintaining checks and balances on democratic institutions, lest they become powerful dictators with a 5 yearly touch contact with democracy.
The Auditor General is appointed by parliament and is responsible to parliament.` He is above the executive (the government) and in fact his role is to control the executive.` To keep check to ensure that the government operates with good levels of corporate governance adopting value for money concepts in the way our funds are being spent by those to whom we give the custody keys of the national purse. `It seems however that the NAO is being effected by the general lethargy which has infected the administration.`
In fact the budget of the NAO is not appropriated by parliament but allocated in terms of constitutional provisions.` Neither government nor parliament can deprive the NAO from the resources it requires to perform its constitutional obligations.
It seems however that the NAO is being effected by the general lethargy which has infected the administration.` Right at the time when the NAO should be sharpening its teeth and showing it mettle, it adopts an attitude of non-chalance, pretending not to know or even suspect that grave omissions of a very serious nature are taking place offending minimum standards of acceptable corporate governance.
Take the case of the conflict of interest of the Freeport Chairman who has undertaken on a private basis a multi ` million investment in a similar port operation in Venice. The government, to the amazement of all who have some salt left in their brains, has solemnly declared that in spite of a breach in the code of ethics applicable to all persons appointed on the Boards of publicly owned organisations, there exist no conflict of interest.
`It wants us to believe that in its contacts with major shipping clients who could be using the service of both ports, things are kept totally separate even though they could be talking to the same person.` Government wants us to believe that the person almost solely responsible for the strategy of the Freeport, which has absorbed some Lm400 million of public funds investment over the years, can handle an investment in a similar operation in the same Mediterranean basin without any risk of conflict of interest. It wants us to believe that in its contacts with major shipping clients who could be using the service of both ports, things are kept totally separate even though they could be talking to the same person.
In 1998 the NAO had very different standards of interpreting of conflict of interest. I was the chairman of Mid-Med Bank, an organisation that had been toying for some 10 years with the study of a project for extending its operating centre at Centru Ruzar Briffa by buying a building next door belonging to Tumas Group.
When I became Chairman the need was extremely urgent for proper implementation of the Bank`s strategy.` As I was a consultant of Tumas Group I abstained from the deliberations of the project.` But I could only do so with responsibility, until the Board did not find itself deadlocked between those who wanted to go for the extension and those that preferred to build a new Centre in a completely different location.` When it came to that, I as a chairman who was ultimately responsible for the Bank`s strategy, had to shoulder my responsibilities. I gave up the remnants of my consultancy engagements with Tumas Group and participated in full in the decision to go for the extension which was passed with a 6-3 majority.
To ensure that the bank does not incur any reputation risk (no matter how unjustified they would` have been ` BOV incidentally is now building a new operations centre just a kilometre away from Centru Ruzar Briffa)` I sent the whole process for prior examination of the NAO before signing any commitment with the vendor. ` Whilst they were eagerly willing to criticise those who consult and ask vetting prior to spending public funds, they now` just look the other way in glaring cases of personal conflict of interest involving large` personal investments.`
After 8 months deliberation, after appointing three independent architects who reported positively on the Bank`s decision, right on the eve of the 1998 general elections the NAO issued its report which favoured the minority view which would have cost the Bank extremely much more than what the Board of the Bank had decided. The NAO even went beyond its brief which was only to check that the process of selection was integral. The NAO felt it had a licence to enter into the merits of the choice itself, for which the NAO have poor credentials, being very scant on banking strategy expertise.
But what matters for today`s argument is that the NAO criticised me for participating in the decision because of possibility of conflict of interest because of my previous consultancy with the vendor. Now I do not hold one single lira of investment in Tumas Group. All my consultancy agreements were terminated in the most formal manner and new persons were employed to take over the work I previously did.` Yet the NAO had so strict conflict of interest criteria that they even saw one where none existed.` The projected was in fact aborted because of the NAO report.
But since then their (NAO) standards have gone down the drain with the rest of the country.` Whilst they were eagerly willing to criticise those who consult and ask vetting prior to spending public funds, they now` just look the other way in glaring cases of personal conflict of interest involving large` personal investments.
With such NAO standards small wonder that they accept matters like Tal-Qroqq hospital project being executed by direct order with scant controls over expenditure.` May be when it ready and all spent and under a new administration, the NAO will recover its teeth to criticise and tell us how things should have been done.
Wake up NAO - you have a big responsibility to stand up and be counted to stop the charade that is going on. Or do you just discover your mission on the eve of an election to embarrass the Labour government`
Sunday, 11 August 2002
Playing God
“It is the ultimate degree of arrogance for any lesser mortal to play the high and mighty and demand of us to set aside our logic and extend the same degree of faith which should be reserved only for the Almighty.”
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“..government was wrong in positively discriminating in favour of citizens of nationalist beliefs but it is normal to avoid using the same measure with labourites.”
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Tlifna l-Valuri
Il-Kullhadd
Assolutament naqbel li l-kaz ta` allegat korruzzjoni ta` membri gholjin fil-gudikatura maltija ma ghandux jigi politicizzat u ghandna nhallu l-gustizzja tiehu l-kors normali taghha bla ma nikkundannaw lil hadd qabel ma jinstab hati permezz tal-process tal-ligi.
Izda ma tistax ma taghmilx riflessjonijiet fuq dak li gara fis-sens wiesgha ta` kif is-socjeta maltija tilfet il-fiducja fiha nnfisha u tilfet il-valuri morali taghha.
Ghax meta socjeta tipproduci sitwazzjoni fejn jigi allegat b`mod kredibbli u sostanzjali li membri gholjin tal-gudikatura hadu flus tad-droga biex jaghtu sentenza bil-favuri, meta dan il-kaz iwassal lill-pulizja biex tressaq akkuzi kriminali u lil-gvern biex jipproponi li l-parlament japprova it-tnehhija ta` zewg imhallfin, dan ikun sintomu ta` problema ferm aktar wiesgha tas-socjeta` kollha. `Gvern fejn kunflitti ta` interess manifesti ta` nies impoggija f`karigi ta` responsabbilta` kbira lejn il-pajjiz,` jigu mhux biss skuzati izda addirittura inkoraggiti.`
U huwa f`dan is-sens wiesgha li xtaqt nikkumenta dwar is-socjeta taghna li donna tilfet il-valuri taghha.` Socjeta fejn il-gvern ilu hmistax il-sena jghidilna li l-flus mhux problema waqt li jibni muntanja ta` dejn li meta taqa` bhal valanga tat-tajn taf iggorna lkoll maghha.
Socjeta` fejn ma ghadhomx jghidulna li pajjizna repubblika mibnija fuq ix-xoghol izda sirna repubblika mibnija fuq l-ghazz.` Fejn il-gvern permezz ta` flusna stess li nhallsu f`taxxi izoqq permezz ta` konsulenzi lil dawk li jpinguh sabih bil-kitba taghhom waqt li ma jsibx flus ghall-aktar servizzi bazici ta` edukazzjoni u sahha,` li c-cittadin bi dritt jipprentendi minghand il-gvern.
Socjeta` fejn qisu xejn mhu xejn. Il-gvern jahli flus il-poplu f`safar, festini u karozzi u l-poplu donnu llupjat jahseb li hela bhal din mhux bicca tieghu. Gvern fejn kunflitti ta` interess manifesti ta` nies impoggija f`karigi ta` responsabbilta` kbira lejn il-pajjiz,` jigu mhux biss skuzati izda addirittura inkoraggiti.
`Wara hmistax il-sena ta` gvern nazzjonalista ix-xibka tal-poter tant rabbiet arroganza li issa bdiet tiddistruggi lilha nnfisha.` Socjeta li taccetta diskriminazzjoni rejali anke ma l-istess membri taghha.` Ghax filwaqt li nies impjegati mas-settur pubbliku igawdu minn protezzjoni qawwija ta` l-impjieg tant li kultant difficli tinforza dixxiplina, haddiema hutna maltin ohra impjegati mas-settur privat jibqghu bla protezzjoni serja kontra tkeccija jew telf ta` impjieg u jintefghu bla kumpens ifittxu xoghol meta l-eta` taghhom tikkundannhom ghal-umiljazzjoni ta` xhur jew snin bla xoghol xieraq.
Socjeta` fejn donnu xejn ma jinkwieta lil hadd kif kuntratti bhal tal-isptar Tal-Qroqq jinghatew b`direct order b`kontrolli skarsi fuq l-infieq.
Socjeta fejn donnha ahna l-maltin ma ghadna tajbin ghal xejn la biex immexxu l-banek taghna, la biex immexxu l-posta u issa lanqas biex immexxu l-ajruport u l-Air Malta. Socjeta li taccetta li l-assi ppregjati taghha jinbieghu lil barranin jew b`irhis bhal fil-kaz tal-Mid-Med Bank jew fejn jingieb prezz ragonevoli bhal fil-kaz ta` l-MIA,` naghtu dritta lil barrani li jithallas tat-tmexxija halli dak li jkun tana fil-prezz tax-xiri jiehdu lura fi hlasijiet tat-tmexxija. ` Fis-sentejn li ghamel Prim Minsitru Alfred Sant ta` prova mill-aktar qawwija tal-valuri veru li lest jinjetta fis-socjeta` maltija. Fejn min imexxi jaghmel dan b`imhabba ghal pajjizu u mhux b`inetess li jipprotegi l-poter u l-interessi ta` dan jew ta` dak.`
Socjeta` li bniet xibka ta` nies li jhokku dahar xulxin billi jipprotegu lil xulxin skapitu tas-socjeta in generali li sadanittant, ghax din ix-xibka tiekol b`hafna hluq u tqum hafna flus, qed tgherreqna bid-dejn li ser jiekolna hajjin.
Il-gvernijiet laburisti tas-snin sebghin u tmenin, bid-difetti kollha li kien fihom, kienu taw valuri lis-socjeta`- valuri tax-xoghol, tal-bzulija`,` ta` l-ghaqal u tas-solidarjeta biex is-socjeta` tkun hanina ma dawk li verament ma jistghux jghinu lilhom infushom.`
Wara hmistax il-sena ta` gvern nazzjonalista ix-xibka tal-poter tant rabbiet arroganza li issa bdiet tiddistruggi lilha nnfisha.
Is-soluzzjoni wiesgha ghal` problema ta` valuri tas-socjeta` maltija hija li hemm bzonn bidla fit-tmexxija politika tal-pajjiz. Hemm bzonn li min imexxina politkament ma jkunx mifni bi hmistax il-sena ta` kompromessi li jwasslu ghal mahfriet presidenjali ta` kriminali horox, accettazzjoni ta` kunflitti ta`interess ferm perikoluzi u bzonn kontinwu li jitma minn flusna l-aptit bla razan tal-klieb il-bahar li jghinuh izomm fil-poter.
Fis-sentejn li ghamel Prim Minsitru Alfred Sant ta` prova mill-aktar qawwija tal-valuri veru li lest jinjetta fis-socjeta` maltija. Fejn min imexxi jaghmel dan b`imhabba ghal pajjizu u mhux b`inetess li jipprotegi l-poter u l-interessi ta` dan jew ta` dak.
M`hemmx fejqan jekk mhux b`dan.
Alfred Mifsud
Friday, 9 August 2002
It`s the economy stupid
The Malta Independent
This symbolises how the electorate tends to confirm or change government depending on how the economy is doing.
It proclaims that the feel-good factor generated by economic growth or the pessimism brought about by recession could be a deciding factor in electorate`s mind when making political choices.
It seems to work in Malta too. Take recent election results.` `In 1992 the Nationalist government got confirmed with a resoundingly increased majority.` Five years of deficit budgeting and liberalisation policies that could easily be absorbed by the cash rich debt free economy inherited from Labour in 1987, spread the feel good factor and translated itself in political approval. `Given that the situation has continued to deteriorate under the current administration and there is all round conviction that we have an economic mess of structural proportions, it is equally predictable that the `it`s the economy stupid!` syndrome will again prevail.`
By 1996 however the feel-good factor had evaporated. People started feeling the pinch of tax enforcement and the erosion of their living standards through inflation. Debt levels and public deficit had risen to an unsustainable levels, so much` that government could not continue to feed the good feel factor through excessive consumption. The electorate needed different solutions and elected Labour with a sound majority.
Two years later the electorate again had a change of heart.` Little did the electorate care that the economic squeeze on the feel-good factor had its origin in the lax spending policy of the previous PN governments.` Labour had to seek the electorate approval at a time when it had only the pain but little gain too show and the result was much too predictable.
Given that the situation has continued to deteriorate under the current administration and there is all round conviction that we have an economic mess of structural proportions, it is equally predictable that the `it`s the economy stupid!` syndrome will again prevail. Which is yet another reason why an election such precede the referendum as otherwise we could well vote no the EU membership for the wrong reasons.
The effectiveness of the `it`s the economy stupid` syndrome will soon be tested in the German general elections due next month.` Schrőder is a popular Chancellor and he has honoured Germany with his leadership over the last four years. But the economy is faltering again just as the election is approaching. It is really not Schrőder`s fault. The international economy has taken a sudden downturn in June and July ( lucky Chirac - he wrapped up his electoral contests before that) and the risk of a double dip recession is taking hold over the prospect of sustained recovery that everyone was expecting. `If the syndrome is still working Schrőder could be the first political victim of the monetary union he championed.`
With Germany no longer in control of its monetary policy which was ceded to the ECB, the political fortunes of Schrőder are hostage to Duisenberg`s clan.` Whilst the softness of the German economy merits an interest rate cut and a more liberal fiscal policy to cyclically pump-prime the downturn, monetary union rules dictate that such decisions are no longer Schrőder`s to make.
However even an electorate as sophisticated as the German one seem to offer no excuses for Schrőder`s impossibility to perform after having ceded important monetary tools to the wider interest of a common monetary policy. The German electorate`s mood seems to be swinging to political change, extending at this crucial final lap stage the gap cultivated by challenger Stoiber.
If the syndrome is still working Schrőder could be the first political victim of the monetary union he championed. A warning to Blair and Brown to reconsider the project for melting Sterling into the Euro if they mean to go for a third term.
Alfred Mifsud