Finance Minister Tonio Fenech this morning again expressed the government's disappointment over Standard and Poor's decision to downgrade Malta's credit rating, saying the downgrade was caused mainly by the situation in the eurozone, not the domestic economy.
Speaking at a press conference, Mr Fenech noted that the economy was performing better than the EU average.
He said the decision to cut government spending by a further 0.59% of GDP reflected the government's prudence. It was being careful, he said, to allow itself elbow room in case it needed to intervene directly to protect jobs, as was done three years ago.
He did not rule out further Budget adjustment during the year.
Malta’s credit rating, along with that of several eurozone countries, was yesterday downgraded by one notch.
The decision reflected the “deepening political, financial and monetary problems” within the eurozone, the rating agency said.
Malta’s rating was downgraded to AA2 from AA1.
INSTABILITY IS NOT HELPING - MUSCAT
Opposition leader Joseph Muscat in a press conference this morning said that at a time of financial and economic uncertainty Malta needed political stability, and this was not being guaranteed by the government.
Dr Muscat said he recognised that many of the issues leading to the downgrade were related to the eurozone, and this was a challenge which a new government would be facing.
Dr Muscat referred to the Budget revision and said no kudos were due to the Finance Minister because the government had known that problems were on the way, and should have made allowances in the Budget in the first place. Furthermore, the revision was only being made after EU orders.
He noted that the government had still not said what programmes and initiatives would be affected by its spending cut, which would total some €40 million.
Dr Muscat noted that while the government liked to make positive comparisons with Germany regarding the economy, Germany did not get downgraded. Neither was Estonia.
He said a Labour government would have been more careful in its spending. It would not have given ministers a pay rise. Nor would it have built a bridge to nowhere (the breakwater bridge) or awarded direct orders instead of calls for tender.
Dr Muscat was accompanied by MPs Charles Mangion and Karmenu Vella and MEP Edward Scicluna, who will be a candidate at the next general election.
When asked who will be appointed finance minister if a Labour government is elected, Joseph Muscat retorted that he did not have a lack of talent - a dig at a comment revealed on Wikileaks where the prime minister reportedly told a former American ambassador that his parliamentary group had a shortage of talent.
When questioned on the current situation and an apparent softening of tone by Franco Debono on Xarabank, Dr Muscat said that the Gonzi government had been characterised by dissent and instability and even if the vote of no confidence was defeated next week, he still expected political instability to continue.
"The government has been hopping from one crisis to another," he said.