The Government decided to raise the target deficit for 2013 from 1.7 to 2.7 per cent to be more credible and realistic in its projections and would now have to face the European Commissioner to give him a detailed explanation of the €70 million increase in expenditure, which inevitably affected the deficit.
The Government will be ratifying the Fiscal Compact
Winding up the debate in the second reading of the Budgetary Measures Implementation Bill, Finance Minister Edward Scicluna said the Government was bound to honour agreements entered into by the previous administration but had not been provided for in the Budget.
These included the Youth Organisation projects, the residential home for youths, the therapeutic facility and various other projects and initiatives.
Many had expected the Budget speech to be longer and more detailed. He explained that all the different measures had already been discussed in detail back in November and he had not felt the need to go through them again. The Government had however felt the need to clarify some ambiguous points such as the tax impacting minimum wage earners.
He assured the Opposition that none of the measures announced in November had been removed.
The Government had promised to keep the same Budget in order to remove uncertainty and allow businesses to plan ahead, based on the two premises that the Budget had already been agreed upon by the European Commission and that the deficit was under control.
The previous government had not managed to reduce the deficit to the target of 2.7 per cent in 2012 and had ended the year with a deficit of 3.3 percent, activating the excessive deficit procedure.
The Government would be ratifying the Fiscal Compact, which would bring about increased fiscal discipline but would see Malta achieve a surplus in its budget in order to reduce the debt.
The National Reform Programme, which would soon be presented, would address the European Commission’s concerns and specific recommendations. These included Malta’s dependency on oil as the main energy source, the low participation of women workers and early school leavers.
He reiterated his belief that the Government should not change the cost-of-living-adjustment system or increase the retirement age. The Budget was approved unanimously.
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