Tuesday, 10 January 2012
Let's stop mumbling!
The first question is whether this is a government own initiative or an imposition by the EU whilst reviewing our Budget for 2012.
From subsequent comments it appears that this initiative follows feedback from the EU.
If this is so what exactly has the EU told us? Our Budget for 2012 projected a deficit equivalent to 2.3% of the GDP and therefore well within the 3% trigger limit of Excessive Deficit Procedures (EDP).
So if the EU is forcing us to shave off 0.59% from our deficit does this mean that the EU concluded that the true realistic deficit for 2012 was 3.59% of the GDP rather than the 2.3% initially pencilled in the Budget approved by Malta's parliament.
That is a gap of 1.29% of the GDP which in quantitative terms amounts to EUR 86 million difference.
If my interpretation is correct it means that Government has to shave off 0.59% of GDP expenditure equivalent to EUR 39.5 million to deliver a Budget deficit of 3% rather than the 2.3% planned.
After having the Budget approved line by line by parliament it is not enough for Government to change the figures by shaving off expenditure of almost EUR 40 million without informing which votes are being changed and from where these savings are coming. Only by having such detailed submissions can one judge how realistic these expectations are.
Most objective observers, yours truly included, had criticised the 2012 Budget for the optimistic base estimates it was making especially on the revenue side. Is the expenditure cut meant to make good for unrealistic revenue expectations?
These are serious matters which merit a detailed presentation not a mumbled Press Release.