Clyde Caruana in Qatar exploring bilateral cooperation

Remember, the heady election days last March when the electorate was busy counting pennies from heaven promised by the Labour Party in its copious 1,000 colourful manifest with treats such as the underground Metro and Gozo tunnel.

The omens were good for the Abela administration carrying the flag winning over an electoral majority of 39,400 votes. The massive landslide was widely predicted by Vincent Marmara, the chief party pollster and many rejoiced thinking the island will now sail along rivers of milk and honey promised by the Red torch carrying brigade.

Yet, the honeymoon was soon over, even the lipstick has dried on the blushing bride. Explaining the decision to take Malta off the grey list, a spokesman for FATF said the island had doubled the resources of its business registry and conducted a thorough risk assessment. Questioned about what had become of investigations into former prime minister Joseph Muscat, his chief of staff Keith Schembri and former minister Konrad Mizzi, prime minister Abela blamed pending magisterial inquiries, and the government cannot interfere in those processes.

The show must go on and party apologists want us to thank Heaven for little mercies. But reality grinds on. Finance minister Clyde Caruana addressing the MCESD has cautioned his audience to tighten their belts for a bumpy ride. Alfred Camilleri, who since 2006 has been the top civil servant at the finance ministry, informed the government that he would be stepping down.

It is understood that he informed the government of his decision almost immediately after the Financial Action Task Force voted to take Malta off its grey list. Kudos to him as his team had succeeded to lift the island from the curse of Grey Listing. Camilleri had battled on in office beyond retiring age to oversee a task force - charged with getting Malta off the list.

More grim news following the advice by finance Minister Clyde Caruana that Malta must be “prepared for what’s to come” as he recalled the bulk-buying of food during the Gulf war in the early 1990s saying the same thing is happening now.

Not a sweetener in this time of summer heat waves when the entire civil service looks forward to clock off at lunch time and most head for the beaches. Clyde was prophetic about the stigma of inflation. He blamed its occurrence to three factors: quantitative easing (printing money), the Russian-Ukrainian war and the pandemic.

Another headache is the scarcity of workers following the return to work as the furlough supplements were clipped. Could the shortage of workers be attributed to falling fertility rates? Are we solving this problem by regular importation of non-Maltese nationals to address gaps in the local labour supply? At the last count, one faces about 78,000 able bodied persons joining the labour pool.

The prime minister questioned on food scarcity, replied that shortages of products could have had a major impact on the price consumers had to pay locally had it not been buttressed by direct subsidies. It could have also impacted other local industries such as herding and animal husbandry. But hold your horses as he calmed the party faithful saying “this is why it is so important to have a government that knows what it is doing, that has the experience, and the proven track record where it counts”. Caruana was less sanguine, telling MCESD members that government could not be expected to control the price of everything. He uttered this warning to the awe-stricken congregation at MCESD. Readers may feel puzzled how the land of “surplus” budgets during the “lAqwa Zmien” has morphed into a Nicaragua in a few short months.

Is this for real or is it a bad dream by Alice In Wonderland? In Lewis Carroll’s “Alice’s Adventures in Wonderland, the heroine falls down the rabbit hole which lands her ominously in Wonderland. In our case, reading the tea leaves for our economic future, it seems that the wicked lady of austerity is knocking on our doors. Some, may label the tantalizing experience as if we woke up from a psychedelic dream. Going down the rabbit hole is a metaphor for a journey into the unknown, as Alice is now invited to comment how the tiny nation is suddenly facing rising inflation, scarcity of essential items like grain, wheat, cooking oil, and a lot of imported products.

Domestically, prices are currently under control but how long can Castille maintain the artificial one-time subsidies? These cannot be maintained for two years as was the case with the lavish issue of free €100 gift vouchers, the €2 billion financial aid to hotels, restaurants, English language school services, among others via furlough schemes. Not to forget bank interest moratoria for ailing companies.

Like in the book “Alice in Wonderland”, voters woke up after the election euphoria feeling blessed by a blitz of wholesome promises which if enacted will lead them to a new world of unknown benevolence. Another worry is the fragility of our financial services sector. The onslaught of new legislation aka transfer pricing, the banning of shell companies, imposing of a European common 15% corporate tax, DAC 6(7& 8) and exit taxes have all turned the tables against Malta as a preferred financial domicile. So far, Malta has successfully attracted key international players in Financial Services, supported by the continuous improvement in the ease of doing business, a strong regulatory environment, unhindered access to the EU market, a long tradition of business support services especially auditing and legal services, enhanced tax competitiveness and the availability of skilled and Englishspeaking workforce.

Another face saver will be the electoral promise to invest €700 million in Greening of the economy apart from installing a waste-to-Energy plant (11 bidders have submitted their offer). This plant when functioning will treat 40% of nonrecyclable waste diverting it away from landfill disposal. To conclude, readers may be invited to contemplate this kaleidoscope of challenges arising from high oil prices (reaching $122 per barrel), the Ukraine war and spiralling inflation - all left Alice in a befuddled state. She will try to dig herself out of the rabbit hole to reach the surface where reality starts and Utopia ends.