The Budget 2024 presented yesterday by Finance Minister Clyde Caruana can safely be described as a ‘social’ one.
It comes when the Maltese economy is facing significant challenges and so are the main markets this country does business with.
Worrying inflationary pressures, a war between Russia and Ukraine that persists with no end in sight, and, now, an explosive situation in the Middle East can only increase the headaches of those handling the economy.
In such difficult times, it is, therefore, commendable for the government to opt for a budget that mainly sets its sights on those finding it increasingly difficult to make ends meet.
It is a fact that many have fallen through the safety net and slowly but surely risk going below the poverty line. As Prime Minister Robert Abela pledged, Budget 2024 contains an array of social support measures designed to help those in the lower income brackets.
Pensioners, for example, will receive a €15 weekly increase because of inflation, and carers’ subsidies will also go up to encourage more community living.
In addition to the substantial cost of living adjustment and, now, a higher national minimum wage, an extra compensation to make up for the cost of living, based on a mechanism introduced last year, will be given to about 95,000 families. While this one-off payment will help the more vulnerable, the country is still rightly asking if the cost-of-living pressures are simply the result of greedflation.
Tax bands remain unchanged, but no new taxes were announced either.
Still, the Budget speech was vague in a number of areas and some of Caruana’s pledges continue to be repeated from one year to the next
The fuel and energy subsidies will be retained, with the government deeming them essential to keep inflation in check, save businesses from closing down and avoid excessive disruptions in the standard of living.
However, as Caruana himself declared, you can spend a little more than you earn for a little while but you cannot do that forever.
Cash grants totalling €40 million will be extended to small and medium-sized enterprises. To fund such initiatives, the finance minister must pull the reins tight on all unnecessary government spending and keep the national deficit in check. In addition to cutting the fat, the call to reshape the economy, laying stress on higher productivity and value-added, continues to gain traction among economists. Until that happens, the measure of uncertainty that emerged in a new survey by the Chamber of SMEs is unlikely to be mitigated.
Against this background, reassuring indications emerge from Budget 2024. Economic growth in real terms this year is estimated to stand at 4.1 per cent, rising to 4.2 per cent in 2024, well above the EU average.
Still, the Budget speech was vague in a number of areas and some of Caruana’s pledges continue to be repeated from one year to the next. There is little in the Budget 2024 to indicate how a tired economic model built on cheap labour will be changed.
There is little investment in the general environment, which is now widely deemed to be essential for our economic and general well-being. The same goes for the education sector.
There was no mention how the government intends to reduce a bloated public sector and the dozens of jobs given to party loyalists who continue being a burden on the taxpayer.
The minister skirted the opposition leader’s legitimate question over how the millions lost in the hospitals’ scandal will be recouped.
The initiatives and projections will be properly analysed in the days to come but, considering the turbulent times, the Budget 2024 should provide stability to several businesses and cushion certain pressures, especially for those that need it the most.