Resource Driven What

Maltastar 

A new phrase has been coined. A great invention has been made. Great problems need great inventions and Malta’s public deficit is so great that it needed a masterly invention to be resolved.

And at last it arrived. John Dalli has unveiled his great plan for resolving what he created, or allowed to be created, in the 12 odd years he has been in charge of public finances.

Last week we were informed that Min Dalli has told the rest of the cabinet ministers and the top executives in the civil service that all expenditure has to be resource driven. A great new invention! A great discovery which needed a vintage of 12 years before the Minister could shout Eureka!

But Eureka arrived last week. So we now have it. The solution to our chronic public deficit is, we are told, resource driven expenditure.

Now resource driven expenditure is as old as the hills. My parents exercised it to perfection to raise a family of fourteen children and give us all the education we could absorb without ever going into a financial deficit. Most of our families are experts at it having to stretch miraculously the monthly cheque to meet the demands of modern life, be it mobile phones, cable TV, private lessons and exams fees for the kids, car repairs and insurances and so many increasing demands on a quite static salary income.

So what all this fuss about resource driven expenditure? In reality it is nothing more than a finger pointing exercise. The Minister has lost control over public expenditure and as the published figures for the first 5 months show, unless he thinks of some window dressing exercise as he did last year with Lm21 million from the MIA privatisation deal, his budget figures at the year end would be laughably inaccurate when compared to the real outturn.

So the Minister has started shifted the blame. Will anybody care or listen? Experience shows it is most unlikely. With a fresh election victory under their arm, cabinet collaboration is notably absent and Ministers are driving along their ego individual path without much concern on whether it would cause problems on their colleague in charge of the public purse.

The restructuring we have seen, like the Private Public Partnerships and creation of a multitude of autonomies agencies or regulators, irrespective of the clear positive deliverables some of them are producing, are certainly not gentle on their claims for public funding. If anything such re-structuring is increasing public expenditure in terms of multiples not just incrementally.

One dares to suspect that some Ministries are indeed doing their damn best to embarrass the finance minister hoping to put spokes in his wheel regarding his personal ambition to succeed to party leadership and prime-ministership when Dr Fenech Adami eventually decides it is time for him to go.

Public finance structural problems cannot be seriously addressed by inventing new phrases or by indulging in finger-pointing exercises. Rather than just resource driven it needs to be driven with the indispensable collegiality and determination from the Cabinet.

Portfolio.

Strategy 1 No Risk Lm1003.994
Strategy 2 Medium Risk Lm 999.530 (after Lm40 charges)
Strategy 3 High Risk Lm Lm 1023.660 (after Lm20 charges)
Strategy 4 High Risk For Currency . Lm 1006.590 (after Lm40charges)

All prices and rates of exchange are the latest available on Saturday 19th July.

Strategy 3 moved ahead after several weeks trailing after Maltacom shares gained 4c0 to close at 94c0. There is still lost of mileage in this investment as I believe that the real value of these shares is in excess of Lm1.50c0 and as the pressure from foreign selling subsides, these shares will re-discover their true value.

Strategy 2 & 4 retreated from last week’s gains as international equities paused this week as bigger than expected corporate earnings are creating doubts on the sustainability of extremely low interest rates.