Beg Steal or Borrow

The Malta Independent - Friday Wisdom

This is what most of us have had to go through in these first seven weeks of the new year in order to attend to our basic needs of cooking our food and warming our houses. Personally, I had three empty gas cylinders stolen from my front door, I had to beg for these to be replaced and when begging still did not work, I had to borrow from friends and relatives who, in biblical spirit, were prepared to share the little they had.

It is quite cavalier for Minister Gatt to demand a public apology from Enemalta for failing so miserably to honour its duties versus the Maltese people who entrusted it with a monopoly for the procurement and distribution of domestic energy requirements. There is no doubt that we deserve an apology for having been constrained, in this age of on-line procurement, to have to beg, steal or borrow in order to satisfy our most basic needs.

However, the apology has to come not just from Enemalta. It must also come from its political masters who are usually quick to take credit for any project conducted by such corporations and who never shied away from unveiling endless numbers of marble plaques whenever a photo opportunity presented itself.

In demanding a public apology from Enemalta, Minister Gatt should have offered his government’s own apology for failing us so dearly. Brushing off responsibility on rigid work practices and other internal corporate inefficiencies does not suit a government which has been in office for nearly 18 consecutive years and which has spent huge millions to accommodate the country’s energy needs.

Why were not such work practice overhauled at the same time as the fixed investments were being made? Is this not what management and leadership is all about? It is not just about authorising and implementing capital investment in plant and equipment but it is also about upgrading the application of human resources to ensure that the plant and machinery perform an outturn at optimum levels to justify the financial investment.

This issue leads me to muse over the privatisations we have had these last 18 years since a new nationalist government, elected in 1987, made privatisation a key economic policy to spur economic development.

In reality we have not used privatisation to spur development through increased efficiency. Instead we have mostly resorted to privatisations as a funding exercise. Labour quarters often claim that in 1987 they not only left a debt-free administration but they left some Lm400 million in reserves. They are both wrong and right.

They are wrong because in making such a claim, they generally refer to the foreign reserves held by the Central Bank which is obviously not government’s property but are assets safeguarding the value of our money supply. However, they are also indirectly right if by “reserves” they mean the patrimony of state-owned organisations that have since been privatised (Lombard, Mid-Med, Freeport, Lotto) partly privatised (Bank of Valletta, Maltacom, MIA) or are on the way to being privatised.

We have privatised the banking sector which was already largely quite efficient. Funding-wise this was quite meaningful, but in so far as economic efficiency is concerned, such privatisations did nothing if not reduce competition on the market. And without true competition there can be no true underlying economic gains.

When Midland Bank was given a full licence to compete with Bank of Valletta, Mid-Med and the smaller APS and Lombard, competition started being felt and local banks had to review their operations and pull up their socks to meet increased competition. When Mid-Med was sold to Midland Bank/HSBC, an important player disappeared from the market and instead of increasing competition, it was effectively reduced. The result is that while the banks are thriving as they make fatter margins thanks to scarce competition, the economy is floundering as it is not finding the necessary responsiveness to finance innovation that normally comes from capital-deficient SMEs.

In general, where we have privatised we have killed competition or sustained an existent monopoly that was transferred from public to private hands. This happened in the case of Maltapost, MIA, the Freeport and the Lotto.

What we should be doing is privatising not primarily with a funding objective but with the objective of adding competition and efficiency throughout the economy. The government should be reviewing all those functions which can be performed by the private sector in a truly competitive environment and ensure that these are transferred out on the market. This would save money for the government and would give a better deal to the consumer, who presently still has to face the arrogance of monopoly suppliers irrespective of whether they are in public or private ownership.

And while we are at it, we should also review the rigidities that still strap our economy and give a very raw deal to the consumer. Let me cite just two examples. Why should we not liberalise shop opening hours? Once we have labour legislation protecting basic working conditions, why limit the freedom of shop-owners to give a better service to consumers by competing also on the basis of quality of service delivery through different opening hours?

Another case. What competition is there to switch bankers for borrowing requirements if this means signing expensive contract deeds re hypothecs and mortgages? Why does the financial regulator not set up a central organisation, similar to the Companies Registry, which would be the beneficiary of all hypothecs and mortgages and then pass on such benefits to the lending institution, thus simplifying switching of borrowing from bank to bank by avoiding the need to sign expensive deeds to cancel the old hypothecs and create new once in favour of the new bank?

There is so much we can do to upgrade the consumer’s quality of life, rather than constrain him/her to beg steal or borrow for gas supplies.

Peurile

The Malta Independent on Sunday 


Government`s arguments to rubbish the view that the rate of exchange of the Maltese Lira ought to be brought down to more competitive level as part of a re-structuring package and before we take the point of no return decision to fuse our currency into the Euro, are getting puerile and ridiculous.

Government is playing cheap politics with a very serious matter which politicians should ideally not discuss in public lest they destabilise the financial structure on which we so much depend.

My position is clear and has been made repeatedly for the last four years.  In normal circumstances a small open economy like ours should avoid resorting to nominal adjustments in the rate of exchange value. There is much to argue in favour of the virtues of rate of exchange stability. But like all virtues they could turn into vices if sustained regardlessly and obstinately when circumstances around us change from the normal to the abnormal. The latest example of this was Argentina who tried insensibly to defend a currency board of the Argentinean Peso with the US dollar before the whole financial structure collapsed in December 2001.

And circumstances are far from normal.` We have had four consecutive years of little or no real growth whilst competitor countries, especially those who joined the EU in membership from East Europe have experienced accelerated growth and a sharp inflow of foreign direct investment which here was only noticeable by its absence.

We have had a galloping increase in our national debt which has exceeded all limits of prudence in its relation to the GDP and this at a time when one-off revenues from privatisation and dismantling of sinking funds held against national debt were simply lost in the fiscal wash.

But more than that we have statistical evidence published by the Central Bank of Malta that the real value of the Malta Lira exchange rate has appreciated by 11% since 1995 because we have sustained negative inflation differentials compared with the inflation experience by competitor countries.`

So those who argue the virtue of stability in the rate of exchange should in reality be arguing for a nominal devaluation to regain such stability in the real value rather than argue against a nominal adjustment which would sustain the instability in the real value that has been allowed to creep in.

I would very much have preferred if our economic policy was more effective in the control of inflation to ensure that our nominal rate of exchange remains aligned stably with the real value of our currency.` But this has not happened and the monetary authorities and the government are at liberty to argue how to apportion the blame for this failure between themselves.`

It really makes no difference to us whether this has happened because of lax monetary policy accommodating fiscal extravagance or because fiscal extravagance made monetary policy ineffective in the control of inflation. What makes a difference to us is that the current rate of exchange is at a level which is at least 11% (and growing) harder in real terms than it was in 1995 and that this is making our export and tourism product uncompetitive.

My position has always maintained that such measure should not be taken on its own as if it was a magic cure to all our problems but has to be part of a well devised package of measures meant to enhance flexibility in our economy, especially in the wage setting and labour allocation mechanisms, to ensure that the benefits of such a rate of exchange adjustments do not drain themselves away quickly in the inflation wash.

And on the eve of our embarking on a project to adopt the Euro as our national currency, involving the loss of two very important economic tools (monetary policy and exchange rate policy) it is a matter of crucial importance that we have a good look at our current exchange rate level and ensure that it truly reflects our economic fundamentals lest we get locked into an unsustainable exchange regime over which we will have no future control, transferring all the strain of adjustment on the real economy, mostly on the employment sector.

By no means these can be considered normal circumstances.

And whilst I faulted the Leader of the Opposition for making public his view in favour of a devaluation [1] it is insensible and self defeating for the government to rule out of hand the use of such a policy in all circumstances.

And the arguments brought against it are absolutely puerile and opportunistic. Like all medicine a devaluation is no piece of cake. But scaring the sick patient from taking the medicine or surgery he needs purely because the convalescence could be quite painful is no way to treat a malady.

If government thinks that just knocking off two public holidays and talking positively about restructuring will do the trick it is grossly mistaken. The pain of doing nothing and avoiding the medicine will be loss of jobs and continued economic stagnation which could be much more painful that the adjustment pain of restructuring.

Arguments that a 10% devaluation would increase the cost of living by 10% would probably bring you the lowest failure mark in the GCE O level economics. Arguments that a 10% devaluation would knock off 10% in the real value of domestic deposits are wide off the mark.

Devaluation if properly executed in conjunction with other measures could project the economy on a new growth path creating sustainable growth and attracting new investment leading to development and innovation. Devaluation could be a socially acceptable way to execute the restructuring as its spreads the burden of adjustment even on those who keep their jobs rather load it all on those who lose their job and have difficulty finding a new one, thus becoming a drain on public finances.

The best thing the government could do is just shut up on the matter and seek to reach consensus with the opposition on a set of economic measures that are needed to get the economy out of the dire straits it is in.` The opposition has every interest to co-operate as if it expects to be in government beyond 2008 it is far better to inherit a restructured economy rather than one that still awaits the administration of painful measures.

So much by so few for so many

 The Malta Independent - Friday Wisdom

This sparked in my mind last week, when HSBC Malta announced an annual profit before tax of Lm33 million for 2004 and the share price exceeded Lm9, leading the bank to propose a share split to bring its unit price down to more popular levels.

The market capitalisation of the bank has now exceeded Lm328 million, of which 30 per cent, ie just under Lm99 million, is held by private investors and is traded on the Malta Stock Exchange. When the sale of Mid-Med Bank to HSBC was announced, the clear and stated intention was for HSBC to acquire this 30 per cent equity stake in the bank which the Malta government could not procure and sell. The offer made to the shareholders was then valued at less than Lm32 million.

The private shareholders could not be forced to sell, but moral pressure was put on them to coax them into compliance with HSBC’s wishes. The most obvious of such moral pressures was the closure of the market for the bank’s shares during the whole period of due diligence – from 5 April 1999 till 2 June 1999.

During this period, especially in the first month thereof, various public statements were made by HSBC officials, reiterating their intention to acquire the private shareholding on the same price and terms agreed with the government, and suggesting that private shareholders should re-invest the proceeds in shares of the HSBC parent. Private discussions I had with such officials at the time left me in no doubt that HSBC were planning to acquire the entire shareholding and then merge the local outfit into the parent organisation.

It took five gentlemen, your truly included, to defend the interest of the private shareholders – firstly by giving them a unified voice when they were at a loss to understand what was going on around them, and then to defend their case, even in court, until HSBC changed its strategy and agreed that small shareholders would be welcome to stay on.

These shareholders, or their successors in title, today are collectively Lm67 million richer, apart from the dividends earned in the meantime, because five of us defended their case with zeal and determination at a time when it was difficult to find a lawyer ready to take up our case in court and when stockbrokers were unwilling to join us in a front to defend the interest of their clients.

Rarely, out of war, have so few done so much for so many. Their efforts should not be forgotten and I salute my colleagues Bonnett, Borg Bartolo, Sammut and Vassallo, as well as Dr Toni Abela, for having the courage to join me when many others of faint-heart had refused, putting self-interest before the common good.

Turning back to the present reality, the government is in the process of selling its last chunk of shares in Bank of Valletta (BOV). As a result, the BOV share price shot up throughout last year and has continued to do so this year, reaching a price in excess of Lm5 which gives it a stretched price earnings multiple of 24 on 2004 historical earnings, whereas HSBC at Lm9 is just at 15 times earnings.

Such a high earnings multiple in BOV share price can only be justified if investors expect BOV operating profit to explode, somewhere near doubling last year’s profits, as a result of cost cuts that will be made by the new strategic partner and the freedom to reduce provisioning levels for bad and doubtful debt after the bank finished a multi-year plan in 2004 to make up for past deficiencies in such provisioning levels.

Both assumptions seem loaded with undue expectations. While one can justifiably expect an improved operating performance, expecting and pricing a doubling in profits in the current share price seems a self-destruct prophecy. This is because if cost cuts can be expected to be found via the new strategic partner, by integrating the bank into its global systems and thus saving on the unavoidable high overhead structure of a stand-alone bank, by raising the share price in anticipation thereto, investors are probably creating a barrier to the interest of any serious global bank in buying into BOV at such a loaded price.

While this time, thankfully, the Stock Exchange has not closed the markets on the flimsy pretext that there is still uncertainty over whether the privatisation of the last chunk of government’s share in BOV will go through or not, this does not mean that investors will not act irrationally and rush into bidding up BOV shares to a price level which would kill any interest that serious global banks might have had in looking at the possibility of buying themselves a strategic equity position in BOV.

And without such a strategic partner, the huge premium built into the price to account for the cost-saving that such a strategic partner can deliver will be unjustified and will eventually be reflected in a downward adjustment of the BOV share price.

I regret spoiling the fun for those private investors who think that BOV privatisation can be a re-run of the happy experience of the Mid-Med Bank/HSBC private shareholders. The analogy simply does not pass the test of reality. Mid-Med’s share price was frozen by market closure at a low level, expecting HSBC to swoop the whole shareholding packet so the market would not need to re-open.

This was averted by the courageous act of the few for so many. BOV’s share price has sky-rocketed beyond reason in a market that has correctly been kept open, making the success of the sale to a strategic partner that can add value (which is under-pinning the share price explosion on the market) more and more like an unreachable hypothesis.

Investors who are coming late for the Bank of Valletta share party, which has been going on for some two years, should watch out against irrational behaviour which could harm so many by the acts of so few.

Waking up to China

The Malta Independent - Friday Wisdom

My contribution of last week ‘Blind Alley’ has generated abnormally high volume of feedback mostly agreeing with my analysis though quite a few offering different opinions on who is to blame.

Let’s not waste energy in arguing about guilt apportionment and preserve our energy for devising a plan on how to regain sustainable economic growth and international competitiveness.

One of the consequences that the saga of the budget measure to remove the days of leave in lieu of public holidays falling on weekend is that it might lead to very false conclusions. For those who were against such measure it could lead them to conclude that what they did not get through negotiations they might get through industrial relations measures either at macro (state) or at micro (company) level. Those who proposed such measures (government) or were prepared to subscribe to them (employers and unions other than the GWU) might wrongly assume that the measure is all that was needed to restore our economy to health.

If only we could leave aside such bickering and take an honest look at what is happening at the world around us and prepare ourselves for the threats and challenges coming our way, irrespective of whether we face them or continue to bury our head in the sand!

The principle challenge and threat come from China. Every country is having to come to terms with the reality of the Chinese economy, growing at 9% plus per annum, which will change the economic landscape of the world.

Every manufacturer in the world must be having a hard look at China and these include many of the factories which are the backbone of Malta’s manufacturing industry. Nobody can ignore a market of one point three billion people whose consumption and standard of living is increasing far beyond anything comparable anywhere else. Nobody can ignore the potential of not only tapping into such huge market but actually producing in China at a considerable cost saving.

If one wants to size up the huge significance of China’s presence on the world markets since it gained accession to the World Trade Organisation, one need just ponder on the quite unique phenomenon that is occurring presently in the world economy. While raw material prices are on a sharp upward trend in view of the increased demand originating from China, in some mysterious way such increase in raw material prices, metals and energy included, is not transmitting itself to the consumer/retail price level. This is quite different from the experience of the seventies and eighties when increase in raw material and energy prices quickly transferred themselves to high retail price inflation and eventually to monetary tightening that forced economies into a deepest post war recessions.

The difference this time is China. China is becoming the manufacturing power house of the world keeping retail price levels low or indeed falling as raw material hikes are more than compensated by production efficiency gains given the low cost environment prevailing in China.

And it is not just China. What China is doing for manufacturing, India is doing for back offices service industry, including IT, whilst Russia is also gearing itself, endowed with rich resources as it is, to become an international economic power-house to be reckoned with.

Given these economic events of metamorphosis proportions, can we afford to continue arguing whether to have 37 or 35 annual days of leave and public holidays? As the French roll-back the 35 hours week and as the Germans force cut-back in their social security structure, can we afford to be alienated by petty internal issues rather than launch a national plan to re-position ourselves properly to make most of the changing economic scenario?

This week the Chinese celebrated the start of their Mandarin new year – the year of the rooster. Places like Las Vegas, built as the world gambling city out of a spot in the Californian desert, re-tooled their expensive outfits built to replicate Paris and Venice to welcome the flood of Chinese tourists who are taking advantage of the economic and political liberation back home to get out and see the world.

Very soon the loss of jobs in manufacturing for the developed world will be more than compensated in the creation of new jobs in the service industry meant to meet the increased the demand of Chinese, Indian and Russian nouveau-riche. Tourism will be one of the major beneficiaries of such an economic shift and tourism services just cannot be outsourced to other countries; they have to be delivered on the spot to the visiting consumer.

Given our characteristics and the underlying strength of our tourism product, if only we can discover it, enhance it and invest in it, we stand much more to gain from the Chinese challenge than we stand to lose from the Chinese threat to manufacturing. This means that basically even our manufacturing has to be shifted to those processes which require instant reaction and delivery to markets demands, producing in small batch runs which cannot be served by the long lead times and huge volumes that go with production in distant Asia.

We can get out of the blind alley if we wake up to the opportunities coming from the Chinese and others.

Time- the Best Judge

The Malta Independent on Sunday 

 
In the first quarter of 2001, when the debate about membership of the EU was raging on, government and the Malta EU Information Centre (MIC) had made great issue with a Eurostat publication that showed that Malta stood, using 1999 data, at 52% of the EU -15 GDP average. Consequently we were told that given the threshold of 75% of GDP average under which we will continue to qualify for the highest level of regional aid, commonly referred to as Objective 1 funding, Malta stood to benefit for a long time from such EU regional funding at maximum level as we had a long way to go before reaching the limiting threshold.

I had contested such assertion and expressed the view that Malta could soon fall out of Objective 1 funding as the 75% of the EU average GDP would statistically be reached much sooner than was being indicated. I based my opinion on two points;

Firstly that Malta statistics were not compliant with ESA 95 standards so the comparison was not on a like for like basis. I opined that when Malta would eventually bring its statistics in line with ESA 95 standards Malta will in fact be much closer to the 75% threshold. Secondly I argued that the 75% has to be measured on a much lower EU - GDP average covering the enlarged EU of 25 or 27 countries and that for the next EU budget covering 2007-2013 we may consequently go above the 75% threshold for objective one funding.

Quoting specifically from articles titled "MI(C)s representation" (April 4 and 5, 2001), I had argued:

 

"What this means in practice is that the figure of 52 per cent of GDP average being widely banded about by EU enthusiasts to support their claim for EU funding upon accession will not stand up when it matters. When, sooner or later, our statistical methods are updated to Eurostat standards for consistent conversion of the nominal GDP in Euro into GDP in PPS units, which is used to establish our GDP as an average of the whole EU, the figure will look very different.”

I had strongly criticised MIC for making assertions without making sufficient caution warnings on the inadequacy of our statistical regime - a caution specifically made in the Eurostat publications on which MIC were basing their assertions.

Specifically, Eurostat had warned that:

 

"Malta however is using a dated system established in 1954 with some elements of SNA 1968. The statistics in this publication should therefore be interpreted with an appropriate level of caution - full comparability with EU states cannot yet be guaranteed".

My warnings had given rise to wild reactions from MIC, (then) Minister Josef Bonnici and from the Prime Minister himself. MIC had accused me of persecution and Prof. Bonnici had argued that I am exposing a wish for Malta to be denied the EU funding due to it (still unanswered -The Times, May 14, 2001).

Both had argued that when our statistical methods are updated, no major changes from the 52 per cent of EU average should be expected. MIC had said specifically (The Times, April 6, 2001): "Once Malta's conversion to ESA is complete, there are no dramatic changes, whether downwards or upwards, that can be expected to its GDP statistics and certainly no changes that will effect Malta's eligibility for EU funding as an Objective One region".

I had retorted that

"Perhaps we should let time to unfold and be the best judge. Let's leave the final say to the test of time. Let's become EU members if we so collectively decide. But let's not allow such decision be taken on the basis of half truths and untruths about funding bonanza".

Time has now spoken. It is my best friend. It is an unerring judge as to who makes objective analysis and who just interprets data whichever way it suits him. The latest data issued by Eurostat shows that we are over the GDP 75% threshold of the EU 25 and if things stay as they are we will not qualify for Objective One regional funding.

And lest I be misunderstood, I repeat what I had written in The Times on May 29, 2001 (What funding?):

"For all the reasons that can be brought forward as to why we should join the EU, funding ought not be one of them. Which is not the same as saying that the argument should stop there".

I admire the determination exposed by Foreign Minister Dr Michael Frendo in drawing a red line and asserting that Malta will be willing to use its veto power for approval of the EU Budget for 2007 – 2013 if a way is not found to keep Malta’s eligibility for objective one funding. The argument that the statistical methodology of ESA 95 is skewed against small densely populated countries as the scarcity of the land produces undue rise in real estate prices which impact to raise GDP for the non-realised increase in property values carries weight. Whether this will be strong enough to force the EU to change a well ingrained structure of methodology is quite another matter.

However the point I make here is not whether we will succeed or not to change the rules to limit the damage. The point is that in the run-up to the monumental decision regarding EU membership, those on the No side who tried to argue sensibly were shouted down and practically ridiculed by high level assertions which were based on wishes and fantasies.

Much the same is happening at the moment when discussing the present economic problems. We continue to pretend trying to solve the issue of loss of competitiveness but the moment I mention that this should not exclude a measure to realign downwards the value of the Maltese lira to neutralise the over-valuation that his been allowed to creep in due to our higher inflation, I am shouted down illogically. The arguments are generally that the measure is too painful. Nobody disputes that it could be very effective if taken in conjunction with other measures.

Avoiding the right medicine because it is painful is hardly conducive to solving the underlying problem that needs to be addressed. Avoiding surgery because the convalescence period could be quite painful is no way to treat a malaise that cannot be treated with just oral medicine.

Time will again prove to be the best judge in this matter as well.

 

Blind Alley

The Malta Independent - Friday Wisdom

The breakdown of negotiations regarding the social pact at the Malta Council for Economic and Social Development ended where they were always destined to end, in a blind alley.

Delicate negotiations like these needed strong leadership by the government acting as an honest broker. The government could not deliver. In office for a quasi-uninterrupted period of 18 years, this government is the main author of the economic problems that make a social pact a very desirable action-programmed cure to regain economic growth based on international competitiveness.

It could not perform effectively in the role of honest broker when it refuses to admit its guilt for driving us into the economic mess we are in. The government refuses to admit its responsibility for jeopardising our economic competitiveness to gain political advantages securing its over-long tenure in office.

The government regards the social pact as a means of having the necessary bitter medicine applied as a guilt-sharing exercise, enabling it to minimise the political fallout of such measures on the pretext that they were also subscribed to by the social partners.

This is nowhere more evident than in the insistence by the government to have the social pact effective for the four years 2005-2008, whereas initially it had indicated a three-year time frame: 2005-2007. With an election due in 2008, government wanted to place negotiations for renewal of the social pact on the other side of the next election, fearing that expiry of the social pact agreement before the next election could expose the ineffectiveness of the pact and the need for stronger medicine at a time when it usually tries to persuade the electorate that it merits re-election on performance.

The unions, the General Workers Union in particular, are right to conclude that the social pact was a means to have the workers peacefully agree to carry the pain of adjustment to redeem the economy from government’s past excesses. In reality this is unavoidably so, but expecting the unions to subscribe to accommodate a government that has authored the causes for the economic mess is like expecting someone to pay your dinner bill although not even invited.

So we are now up a blind alley. The government is politically committed to legislate the measures announced at last budget that are tougher than the package that was refused by the GWU at the MCESD. The GWU is practically committed to refuse such measures and, unavoidably, this will lead to industrial relations friction, an increase in economic instability and the general deterioration of our competitiveness while the rest of the world keeps moving forward.

Truly and squarely we are in a blind alley caused by the mediocre quality of the political leadership we have had for more than a decade. We have a government well past its sell-by date. Covered as it is with the guilt of commission, it cannot present itself as an honest broker, firstly to properly define the problem and then to put together an effective social pact without which we cannot get ourselves out of the economic rut that is threatening our economic survival.

On the other hand, we have an opposition that refuses to make itself perceived as an alternative government. Its failed leader has rendered it as a protest party. When it tries to offer constructive solutions, it fails miserably. The economic regeneration plan it issued last autumn is full of useless generalisations. In one of the few specific measures it proposes, the routing of the annual bonus to a social solidarity fund, it shows it has lost its social roots in proposing a measure that will put the burden of adjustment unfairly on those most in need.

Hip-shooting proposals to adopt crawling peg type adjustment to our rate of exchange can only be a recipe for economic instability, and politicians should not discuss rate of exchange policy issues except to re-affirm, even if unconvincingly, the present mechanism. If a change is needed, it can only be effective if applied with instant effect without prior intimations.

In such circumstances it is normally the duty of the President of the Republic to use the weight of his office to bring the government and opposition to work on a national plan for economic survival and regeneration. But we have a President who has carried to this honourable position the historical burdens of his long years as the chief executive responsible for the failed policies that have brought the country to the economic mess it is in.

With a government that lacks both an electoral mandate and the quality leadership to carry the country forward with the painful adjustment process that is necessary, with an opposition that seems to think that it can win the government by default without any realistic plans of what to do once in authority, and with a Presidency that carries no moral suasion powers and functions only for ceremonial purposes, it is no wonder that the country is up a blind alley.
Consanguine Dr Anna Mallia recently boldly stated that the leader of the opposition has to go. She was echoing my oft-pronounced thoughts that Labour leaders ought to know when their time is up.

As his predecessors did when they realised they serve the party better by going rather than staying, Dr Sant should bow out of his own free will, rather than continue abusing the culture of loyalty to incumbent leader by never voting him out. He has already denied the party the honour of his going of his own free will while those around him outwardly pretend they wish him to stay. He should not increase the pain by being forced to go by an internal revolt or yet another general election defeat.

But the same applies to the office of the Presidency. It is time for a national effort to take this country out of the blind alley we are in and the Presidency has a pivotal role to play in brokering such a package. The current President, covered in the guilt of authorship and execution of failed economic policies, cannot carry out such a function. For Dr Fenech Adami as well, it is time to go, not just change chairs. The politicians who dominated the political scene between 1992 and 2004, when our currents problems were expertly manufactured, should go if they truly put the national interest before their own.