Malta’s economy could contract by up to 10 percentage points as a result of the coronavirus outbreak, Finance Minister Edward Scicluna said in parliament on Wednesday.
Scicluna outlined the economic impact during a debate on the latest aid package rolled out by the government. Prime Minister Robert Abela did not take part in the debate.
Scicluna warned that COVID-19 would affect the government’s revenue in terms of VAT, tax and national insurance.
On the other hand, expenditure in the health sector alone would increase by more than €100 million over the 2020 Budget allocation.
He warned that countries having huge debts would move closer to bankruptcy.
“There will be an EU crisis just like the case of Greece a few years ago”.
In Malta's case, public finances were healthy, with debt at around 45 per cent of GDP, he said.
While cautioning against trying to make certain projections due to the volatility of the situation, Scicluna said the second quarter would be dismal in terms of economic growth and it would only be in the three last months of the year that some sort of recovery could be expected.
Malta’s partial lockdown, he said, would result in economic, social and psychological consequences.
“It is not easy to find a compromise, though public health must be given priority,” he told parliament.
'Distribute the €70 million saved from oil prices drop’
Opposition MPs echoed remarks made earlier by Nationalist Party leader Adrian Delia that the government had acted late and was being selective in its stimulus package. They called for the government to extend aid to all of Malta’s 172,000-strong workforce.
Adrian Delia said the government should start by distributing the €70 million which he said were going to be saved in electricity generation as a result of the drop in oil prices. He remarked that it beggared belief that the finance minister was yet to set up a committee to help in the drafting of the fourth aid package. Countries like France and Germany had declared there would be no limits and that employees would not lose one cent, he added.
PN deputy leader for parliamentary affairs David Agius said the partial lockdown would burden families, as staying at home would result in an increase in energy consumption. Halving utility bills would be a very humane way to mitigate the effects, he said.
PN deputy leader for party affairs Robert Arrigo said the government in its aid package had ignored media houses and the construction industry which involved thousands of workers.
“You paid danger money to a PBS cameraman but refused to pay danger money to nurses.” He said the government was adopting a management-by-crisis approach.
‘Half wage subsidy for all the workforce a financial suicide’
Economy Minister Silvio Schembri who gave the winding-up speech, lambasted the Opposition’s call to subsidise all wages by 50% across the board, saying this would be a “financial suicide”. He claimed this would cost €340 million over three months, which could not even be recouped by a 20 per cent pay cut of all those on the State payroll.
Taking a dig at the Opposition leader, he said he would have expected Adrian Delia to follow the example set by himself and the prime minister to donate a month’s wage as a symbolic gesture.