Protecting Malta’s economy from inflation and rising prices will be a “marathon and not a sprint”, Finance Minister Clyde Caruana told social partners on Monday. 

The Malta Council for Economic and Social Development met to discuss the ministry’s national reform programme, to which the media was invited to hear their opening remarks. 

In the MCESD’s first meeting under the new administration on Monday, Caruana said the government is keeping a watchful eye on international developments resulting from the fallout in Ukraine and pledged that the administration would do whatever it takes to stave off rising inflation. 

“The reality around us is what it is,” Caruana said. “We can anticipate how we expect the situation to develop because it is already happening overseas. We are following these situations closely, because what is already clear is that in European countries that don’t have the flexibility to manoeuvre and change, the effects of inflation are clearly already penetrating their economies.” 

Caruana added that while the government was doing as much as it could to prevent inflation from rising exponentially, it could not be expected to seek to control the price of everything. 

“In some countries, inflation has already reached the double digits, but for the time being Malta’s is still the lowest in Europe,” he continued. 

Malta's inflation situation

Inflation as measured by the Retail Price Index reached 4.2 per cent in February, data published by the National Statistics Office showed. By comparison, in February 2021 inflation only registered a 0.19 per cent increase.

In other EU member states, inflation is rising at a much higher rate, in large part because other countries are not absorbing the rise in energy prices, as Malta’s government has pledged to do. 

Caruana said that decision – as well as the decision to cushion the rise in some foodstuffs, such as wheat – had taken an “enormous effort”. But he also had a warning. 

“We cannot be expected to control everything. It isn’t the 80’s anymore, our economy has changed entirely and a mission like that would fail.”

Nonetheless, Caruana said the government is committed to safeguarding the Maltese economy through difficult times. 

“We will do everything in our power, and when I say this, I mean we are gearing up for a marathon and not a sprint, to safeguard the structures of our economy,” he said. 

“I say with boldness and commitment that the government will continue to undertake this effort not just for the coming months, but for the coming years because we have seen what is happening in other countries and we cannot permit this to happen to us.”

Malta's energy sector challenges

Caruana also said that despite an explosion in energy prices, the European Commission has remained adamant about maintaining emission reduction targets. 

“This means countries like ours need to make enormous changes in our energy sector, we have a lot to achieve and it's going to be substantial,” he said. “I say this not to instil a sense of despair but to make it understood what kind of effort we have to undertake in order to get the country to the level that it needs to be.” 

Photo: Jonathan Boerg

Parliamentary Secretary for Social Dialogue Andy Ellul said that while he was new to the role, he was committed to strengthening dialogue within the council and continuing to involve stakeholders in the important decisions being made for the country. 

“This forum should not just be a talking shop. Our job is to make sure that what is discussed here is communicated clearly to the government and considered seriously before decisions are made,” he said. 

“My aspiration is that with all of our input will contribute to a foresight that will be helpful not just in times of global disruptions but whenever it is necessary.”