Tonio Fenech’s (Im)Pure Maths

The Finance Minister’s assessment of the economic situation is unbelievable. Dr. Fenech can see no wrong, he has an excuse for everything, even if it is most incredible.

Tonio Fenech tried to explain the recent figures published by Eurostat regarding our debt-to-GDP ratio. This data shows that at the end of March, the National debt stood at four hundred and thirty-one million euro (€ 431,000,000). Yet Dr. Fenech claims it is only a temporary situation which will improve by the end of the year.  He says that the Government has already borrowed the full amount it was meant to during the whole of 2012. He also says that the government will not replace the Government bonds due by the end of the year. His financial forecasts are optimistic but his financial reporting does not make accounting sense.

The Finance Minister prides himself in his forecast that the National debt as compared to our GDP, currently at 75%, will fall to 72% by the end of the year. He seems to have forgotten that in his budget speech he had said that Malta’s National debt would be at 69% of GDP by the end of the year - another accounting error perhaps? He accuses the PL of presenting a negative picture but he assumes responsibility for declaring world benchmarks for recession wrong. Whereas Malta is officially in a recession, GonziPN speakers say that the economy is performing well. In May this year, the EU published forecasts for each state and the forecast for Malta was diametrically opposite to what the Prime Minister and Finance Minister say. 

Our deficit is ever on the increase. In the first five months of the year the deficit rose by € 83 million when it should have been reduced by € 50 million. Once again our Finance Minister found an excuse by saying that this was mainly due to social services and the Airmalta bailout.

Cost of living increases are always put down to some seasonal increase. The Finance Ministry is constantly claiming that the increases are only temporary but Maltese families know their maths and it does not tally with that of GonziPN and Tonio Fenech.

The SPV created to finance the Prime Minister’s whim, the new Parliament, will hide any increase in Government debt. Yet the government will borrow € 40 million from the ECB, put up another € 20 million and ask the Maltese people to fork out the remaining € 20 million. One wonders what would happen if there are any cost overruns to the project. Will the government increase its debt or will GonziPN merely guarantee the loan that Malita Investments would have to take up to cover any possible increase on original estimates?

With this type of accounting, Malta will face serious problems when a responsible and capable Minister takes over the country’s Finance Ministry. There is absolutely nothing wrong in avoiding a doom and gloom attitude but it is incorrect and incompetent to hide facts and instead spread false propaganda in favour of the government.