What Finance Minister Clyde Caruana presented us with on October 24 was undoubtedly a budget as it had many numbers in it. Yet, the budget should never be just a collection of numbers but an expression of our values and aspirations.
I am no economist by profession, but I want to have a keen interest in how my country and government raise their finances and eventually spend them on various projects and in various sectors.
Of course, I am the last person on earth to feel competent to make any suggestions and proposals to our finance minister as to how better manage the national budget from year to year but, on a personal level and as a taxpayer, I do have every reason to voice my concern if and when I envisage or get a reasonable perception that not all is well with the balancing of the country’s budget.
For example, it is not appeasing to read that government debt in Malta increased to €8,672.20 million in the first quarter of 2022 from €8,284.40 million in the fourth quarter of 2021.
Neither does the probability that this debt is bound to continue to increase in the coming years have any calming effect on anyone in his or her right senses.
Of course, deficits do not in themselves produce inflation, nor does a balanced budget assure a stable price level. The national debt is totally unlike a family budget for numerous reasons, not the least of which are that families cannot raise money by fiat or deflate the size of their debt unilaterally and that family members die instead of existing infinitely.
We might enjoy some peace of mind as, apparently, we have at the helm of our country’s finances a man who is ready to come to grips with the economic realities of our country. He has finally recognised what his predecessors shied away from recognising. The cold harsh reality is that we have to balance the budget, now.
It is time to stop spending money we do not have but pretend to have and to balance the budget. I can see in Caruana someone who has come around to know how to balance a budget, who understands the urgency of delivering all the services that a small country like ours needs and who understands the need of working families.
A government budget is the means of providing control over expenditure and revenue to the government. Budgets help in maintaining stability and control over the government’s finances and are also a means of providing accountability through financial reporting.
COVID-19, the Russia-Ukraine war and the resulting energy crisis have reversed several years of rapid progress- Mark Said
It is important for the government to ensure that funds reach where they are required the most.
When it comes to budgeting, identifying areas of weakness helps the government to allocate resources in a useful and sustainable manner. This is one of the most fundamental objectives behind framing a government budget. Any political party which forms a government at the centre has certain social, political and economic responsibilities.
In line with the standard practice involved in previous budgets, this year’s budget, too, was made up of a few significant processes that overlap in the implementation during a budget year. We initially had the budget preparation and, now, the budget authorisation.
The preparation of the annual budget involved a series of steps that began with the determination of the overall economic targets, expenditure levels, revenue projection and financing plan as well as the preparation by various government entities of their detailed budget estimates ranking programmes, projects and activities.
Eventually, the budget implementation and execution will start with the release of funds to the ministries and other governmental entities. Cognizant of the fact that no propitious results can be obtained, even with maximum funding, if government efficiency is low and funds are wastefully spent, we must have better systems and procedures in place to monitor and evaluate the performance and cost-effectiveness of overall government performance.
It is extremely important for the government to allocate resources wisely. Various factors such as uplifting underprivileged sections of society, facilitating financial inclusion, mitigating regional disparity, upgrading infrastructure, providing proper educational facilities and much more need to be focused on.
Therefore, a well-planned budget is of utmost importance for any government to ensure economic stability and growth.
All of these seem to have been targeted by this latest budget and, all in all, appear to be its hallmark. It should allow the government to regulate the imposition of taxes in various sectors.
Investment and expenditure are some of the most prominent factors contributing to the growth of our economy. In all probability, the government will continue to encourage people to emphasise more on savings and investments by providing tax rebates and subsidies.
COVID-19, the Russia-Ukraine war and the resulting energy crisis have hit most countries hard, Malta included, and reversed several years of rapid progress. Clearly, we want fiscal policies to counteract these crises, not make them worse. We must not let budget deficits get bigger as revenues fall.
Our government had timely and effectively introduced a discretionary fiscal stimulus, a fiscal cushion that protected the poor and vulnerable from the ravages of those crises.
Can we be confident that in the coming months and years our finance minister will be thinking ahead on how we can most efficiently get back to a solid, sustainable budget position once the storm has passed?