Government debt expected to fall below 50 per cent by 2018

Finance Minister Edward Scicluna described government expectations for public debt to fall below 50 per cent by 2018, providing subsequent governments with ample breathing room to implement policy.

He was addressing a pre2018 budget meeting with the Malta Council for Economic and Social Development. Scicluna focused on the need to invest in infrastructure, so that it may continue to help the economy grow.

He remarked that while the government has taken steps to ensure that the economy continues to grow, providing opportunities for the people, infrastructure is failing to keep up. He commented that this will cause ‘breakages’ within the economy.

He did not delve into too much detail about how exactly this will translate into the upcoming budget.

“If you do not invest in infrastructure, the economy starts to break, and you end up with external costs and congestion costs,” he said.

Scicluna added that the “budget needs to orient itself around these external costs, and what is needed in terms of investment.”

Turning to inflation, the minister said that it has stabilized due to the elasticity of the labour force, meaning that the labour supply is quick to respond to an increase in demand for workers.

On government debt, Scicluna remarked that previously, €220 million a year was spent from the taxpayer’s money to cover public debt. He described how with falling debt, government after government can enjoy the freedom of implementing policy rather than worrying about making payments.

For 2017, public debt is projected to fall below the 60 per cent mark. He gave an overview of macro-economic trends to illustrate Malta’s healthy financial position, such as the low unemployment rate and stable inflation.

Parliamentary Secretary for EU funds Aaron Farrugia spoke of the dialogue with the MCESD being strengthened through more frequent discussions and the government’s ‘result-oriented’ approach.’

Minister for European Affairs and Equality Helena Dalli spoke of the council’s focus on discussing how employers will be giving their workers holidays to replace feasts that fall on the weekend, and also expressed her pleasure at the progress being made within the MCESD.