Updated 1.55pm, adds PL's reaction

The government needs to rethink Malta’s current economic model to address the impact of COVID-19 on the economy, Nationalist Party leader Bernard Grech said. 

Unveiling the party’s pre-budget document, Grech said the upcoming budget was not an “ordinary” one. 

With an economy heavily dependent on tourism, hospitality and accommodation; the economic consequences have been significant. 

“This is also compounded by other internal challenges that have been brought about by the short-sighted economic vision and policy of the Labour administration,” he said. 

As 2021 nears, the PN believes more economic sectors will require additional support packages.

While these packages need to ensure that employees are retained and retrained where necessary; we cannot afford to lose sight of the horizon as one day this virus will pass and we need to be prepared for that day, the new PN leader said. 

The party said its document is based on four key components that it believes should be addressed to support the economy in 2021.

They are: 

• Employment maintenance and restoration;
• Financing and supporting investment in Maltese SMEs;
• Tax relieving and cash-flow measures to stimulate demand in the economy; and
• A masterplan for key sectors of the Maltese economy, driven by transformation with the help of digitisation.

With a 15% contraction in GDP, it is evident that Malta is entering into a very difficult and challenging economic time. With a recession underway, government needs to support local businesses to ensure their survival as otherwise the resulting loss of jobs will be significant, the PN warned.

Among other initiatives, the PN proposed to:

• Extend the wage supplement to cover the full amount to enterprises needing support, including new employees, whilst providing clear visibility of the support up to at least March 2021.
• Extend wage supplement to provide also for businesses which are facing severe cash flow or profitability challenges and not just arbitrary selection of economic sectors.
• Businesses will be given the option to either stay on the current Covid-19 wage supplement (Annex A) or enter into a supply agreement with government wherein government will acquire a stock of services capped at the wage bill of the employees for a six-month period, capped
  at €2,000 per month per employee.
• Issue a second set of vouchers to be used exclusively in retail, catering outlets and cultural events.
• Extend loan moratorium periods for an additional six months; extend interest rate subsidy of 2.5% to all loans linked to new investments;
• VAT rates can be temporarily reduced to lower prices.
• Companies should be allowed to carry back tax losses in 2020 to cover tax due in 2018 and 2019.
• A reduction in commercial and household utility rates and fuel should be introduced to reflect current market prices. 
• Launch a national tourism strategy that addresses the new reality of post-COVID travel.
• Extend the reduction of stamp duty to buyers and transfer tax to seller to cover the full year 2021.
• Continue to provide grants to media houses by establishing a minimum
  threshold to which each media house is entitled and provide additional financial assistance depending on number of employees.

PL's reaction

In a reaction, the Labour Party said the few ideas Grech spoke about were a repetition of initiatives which were already being taken by the Robert Abela government.
 
The PN’s document, it said, showed that even at challenging times it was the present government who had the solutions.

It said that the tone used by Grech while launching the document was another sign that the PN had appointed a leader who was not proud of his country.

Those who believed that the work done by the Maltese and Gozitans in the past years for the economy to progress was useless, could not be trusted with the economy, the PL said.

It added that those who declared that the country had built an unstable economic model when it had been in a position to give the biggest aid at an extraordinary moment was showing they had been affected by the destructive and partisan attitude of the past years.