Sunday, 9 June 2013

Tonio's excessive arrogance

The last person who should criticise Labour for being admitted to the Excessive Deficit Procedure by the EU Commission, is the former Minister of Finance Tonio Fenech:   

This for three clear reasons:

  • Under his tenure Malta has been there twice before
  • The new admittance was caused by the deficit of 3.3% of GDP in 2012 for which he was the responsible Budget Minister
  • The Budget for 2013 which he claims has not convinced the EU Commission is largely the same budget he prepared and presented in parliament in November 2012 and voted for it in April 2013.
So you have to have some cheek, indeed excessive arrogance, for Tonio Fenech to argue the way he did in his opinion piece in the Sunday Times of today.  Especially the bit where he says:

the Edward Scicluna Budget plans a 2.7 per cent deficit, and not a 1.7 per cent deficit as planned in the Tonio Fenech Budget.
The Edward Scicluna Budget plans a 2.7% deficit being 1% higher than the Tonio Fenech Budget purely because the starting deficit position on 1st January 2013 was 1% higher than Tonio Fenech had projected it when presenting his 2013 Budget just 33 days earlier.   Tonio  Fenech had projected a 2.3% deficit for 2012 but it finished 3.3%.  Some much for his budget accuracy over a span of just 33 days.

And the following is a wicked half truth:

 However, the Government decid­ed to seriously reduce its revenue forecasts, not because of any significant downturn in economic activity, but in Edward Scicluna’s words, to be conservative and reflect projections made by the IMF and the Commission that on the economic activity front have consistently been more cautions, nevertheless with actual results surpassing their expectations.

In November 2012, 33 days before the end of the year Tonio Fenech had estimated that the revenue for 2012 was to be EUR 2868 million down from original projections of EUR 2961 million.  The actual revenue for 2012 in fact came in at EUR 2716 million, a full EUR 151 million less that the revised projection.

Given this performance who can blame Edward Scicluna for reducing the revenue forecast for 2013 from EUR 3126 million projected by Tonio Fenech's  original presentation to a more realistic EUR 3030 million which is still 15% above than the actual of 2012?

The EU still considered Edward Scicluna's downwardly revised figures as optimistic and advised Malta to realistically spread the adjustment to get below 3% over 2013 and 2014 rather than swallow the hit completely in 2013.   What makes Tonio Fenech think that the EU would have behaved differently with regards to his more optimistic figures?

When it comes to government budgeting there is pretty little any government can do in the first year to change the course of expenditure and revenue flows of the previous administration.   The EU Commission flexibly allowed Labour government to come within 3% deficit over a two year period, i.e by 2014, even though Labour committed itself to come in line by end 2013.

Has Tonio Fenech has not yet learned were excessive arrogance gets you?

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