Balancing act for a better tomorrow
It will probably be the most important budget in many years.
After taking over the reins of the country in 2013, the Labour government managed to take Malta into the black, registering a surplus in 2017 for the first time in 32 years, and keeping up the trend.
But no-one could have predicted a worldwide disease that, apart from causing more than one million deaths and adding burden on the alreadystretched health sector in many countries, also had devastating effects on the economy.
In Malta, the government has had to dig deep into the country’s coffers to keep businesses afloat. For a number of months, tourism was dead as the airport and ports were closed, and internal consumption was limited to daily needs as retail outlets, entertainment venues and vanity shops were kept shut.
Through various initiatives, the government also sustained the private industry via wage supplements and delays in the payment of taxes. Later, individuals were aided with a €100 voucher scheme which in turn sustained the economy, as people were encouraged to spend again.
But it’s not over yet, and it will not be anytime soon.
The number of COVID infections (and deaths) has surged higher and higher in the past two months or so in Malta. Concurrently, and since a closed economy was no longer sustainable, travelling resumed and shops and restaurants were reopened, although with certain restrictions. Things have improved, but one cannot say that economic activity, including the tourism sector, is back to pre-COVID days. Far from it. And there cannot be any predictions as to when the situation will get back to what it used to be (if that’s possible).
So the budget for 2021 that Finance Minister Edward Scicluna will be presenting in the coming days will not be an easy exercise. On the one hand, the government must continue to support the private sector, which has been badly hit by the health measures that were (rightly) taken since March, but at the same time it cannot act as if there is no tomorrow.
Still, it was good to note that Prime Minister Robert Abela has already made it clear that the wage supplement will continue beyond October. Whether this will remain in the same format as we’ve had it since last March – or what the new deadline will be – remains to be seen. Businesses hope that the government will keep up its assistance at least until March as this goes to alleviate the pressure that most of them have felt since the start of the pandemic.
The government would also do well to consider a second vouchers scheme, which would have a two-pronged effect – that of aiding individuals, particularly those who are still experiencing wage-cuts, and that of supporting businesses, where the vouchers will be redeemed. Detractors tried to belittle its function when the first scheme was announced, but it generated much needed income for the private sector and jobs were also saved.
It will not be an easy task for the government to work things out and come up with a balanced budget.