Safeguarding our businesses and workers

Many are worrying about the economic impact of COVID-19. They contend that an open economy like Malta, dependent on tourism and with strong links with Italy, is bound to face a major shock.

Like the Prime Minister has said, the appropriate reaction to the challenge we face is to stay calm and rational. No one can deny that COVID-19 and the measures announced to defeat it will not have an impact. However, while we are adamant that we have built a resilient economy that is well able to withstand this challenge, the government also recognizes that particular sectors of the economy will be impacted due to a low demand for their products and services.

A slowdown in the global economy, particularly with regard to travel, is significantly affecting consumption in both international and domestic markets. Nevertheless, despite the inopportune fact that we are now enduring a testing period in our history, a time to batten down the hatches, we are more than satisfied that we can successfully overcome this adversity, as Malta, like never before, finds itself in a strong economic position to do so.

Recent data shows that if anything, the Maltese economy, even when COVID-19 had started to hit the world economy, was accelerating. This January our industrial production was growing at an annual rate of 8%, as against a growth of 1% in January 2019. This January, tourist arrivals were up a staggering 17.5%, as against 2% in January 2018. In February, traffic through our airport was up by another 17.3%. The economic impact of COVID19 has to be taken in this context of very rapid growth.

When surveyed in mid-February by the European Commission, Maltese manufacturing firms said they had order books to last them 12.4 months of production. This is double the historical average for Malta and two and a half times the response given by EU firms. The same survey indicates that Maltese consumers have the highest level of confidence amongst all EU countries. Across the EU when asked if they are making major purchases at the moment, a majority of 6% of all consumers answered negatively, in Malta a positive majority of 31% replied that they were making major purchases.

It is therefore reassuring to know through this data that the COVID-19 challenge is hitting the Maltese economy at a time when it is at its strongest. Our economy is more than twice the size it was in 2008. It is diversified into many more sectors. Our households, firms and government have a much healthier balance sheet, with several billion euros in liquid savings.

It is against such a robust economic environment, which is possible thanks to a mindset which has fostered the creation of a surplus that this government has generated over the years, as well as a thriving economy which now enables us to offers significant economic measures to support those businesses which are being impacted by the economic repercussions of this pandemic. These are economic measures which will be organised in three stages; short-term measures aimed at addressing those businesses with cash-flow problems, as well as medium-term measures and long-term measures to assist those businesses which will be facing decreasing orders for their products and services due to a global economic slowdown emanating from the same pandemic, as well as to train their workers and improve competitiveness.

Alongside Prime Minister Abela and Minister for Finance and Financial Services Edward Scicluna, we announced the postponement of taxation payments as well as funds on telework systems aimed at businesses. Companies and self-employed now have a twomonth postponement to pay VAT, Provisional Tax and National Insurance Contribution on Salaries; for taxes owed till the end of April and this is eligible only if all employees are retained. This applies to the following sectors, tourism, hospitality, entertainment, transport and manufacture.

With regard to teleworking, a system which several employers and workers are opting for in a bid to avoid the spread of COVID19, those businesses which are investing in these systems may benefit from a refund of up to €4,000. Further details and guidance will be available from Malta Enterprise.

These measures have been passed to safeguard employees and to reward them for their hard work when business activity was good.

It is in challenging times like these that the government is put to the test on the ability to devise and support effective economic measures and Malta stands at a strong economic position to do this. Therefore, we are more than sure that together with other stakeholders, we will once again rise to the challenge and guarantee more prosperity to the citizens of our brave republic.