Government wants to give the impression that it has the situation under control and that it is business as usual, so much so that it is already putting the finishing touches to its Budget for 2013.
It remains to be seen whether parliament will reconvene before the coming election and whether government will risk presenting its Budget for 2013 for a debate and a vote in parliament. It has no guarantee that it has a majority to pass its Budget for 2013.
But this political consideration apart, the 54 page pre-budget document raises other serious issues. It sets the deficit target to go down to 1.5% of GDP in 2013, 0.9% in 2014 and 0.4% in 2015.
The target for capital expenditure is not to exceed 2.5% and says that by 2013 public debt should go down to 60% of GDP from the current 75%.
How realistic are these targets? Economists like MEP Professor Edward Scicluna, Konrad Mizzi and Karmenu Farrugia have expressed their doubts. They say that the projections for 2013 are based on the outdated forecast of economic growth now that we are in a recession.
Professor Edward Scicluna accuses the government of fiddling the statistics and tries to mislead even the International Monetary Fund and the European Commission.
Konrad Mizzi sees the government figures for 2013 as very optimistic and unrealistic considering that this year the public debt has shot up to 75% of GDP, the deficit increased by €94 million in the first six months, unemployment has risen by 8% and retail trade dropped by more than 7%. Mizzi feels that government is not taking the situation seriously and worries that in campaign mode it will become more reckless and try to spend its way to curry favour with voters. He thinks before the budget parliament should debate the economic situation especially unemployment, lack of confidence by consumers, the deficit and public debt.
Karmenu Farrugia says that the figures and estimates for 2013 are based on the situation in March 2012 when government did not know what in the first three months of 2012 GDP was to contract by 1%. He asks whether the economy has shown any signs of recovery between March and June 2012.
He considers the pre-budget document a wish-list. He says: “We still have to see whether the deficit for this year will go down to 2.2% of GDP as targeted by government.”