People at the bottom of the income ladder should get more financial aid, Central Bank governor Edward Scicluna said, as the government gears up to announce next year’s budget.

Speaking to Times of Malta on Tuesday, the former finance minister said that the government should target more financial aid to vulnerable people.

Asked whether this would mean reducing financial aid to richer people, he said the government could still give something to everyone but should give more to “those at the bottom”.

Full confidence in his successor

He would not go into further detail as to how the government should distribute subsidies, insisting he is in no position to tell the finance minister how to run the country’s finances. He stressed he has full confidence in Clyde Caruana and Robert Abela’s economic vision.

His comments come as the government finalises its Budget 2023 while the country grapples with the post-pandemic recovery and now rising inflation and a looming energy crisis brought on by the Russian invasion of Ukraine.

On Friday, the government will launch a pre-budget document which will set the economic scene for the upcoming budget. 

And, on Monday, the finance minister will give a first look at what can be expected during a budget question and answer session organised by Times of Malta.

Scicluna, who is also a member of the governing council of the European Central Bank, said EU states are being urged to target their financial incentives to the more vulnerable.

In a press conference last week, European Central Bank president Christine Lagarde urged EU states to target fiscal support measures to “the most vulnerable households and firms to limit the risk of fuelling inflationary pressures, to enhance the efficiency of public spending and to preserve debt sustainability”.

Asked whether he is worried about the rate of government spending and the sustainability of energy subsidies, Scicluna insisted he cannot tell the government how to spend its money but is happy to see that Abela and Caruana have a good hold over the country’s debt and deficit, which is crucial to economic stability.

“I can only advise the government on how to channel funds but I cannot tell them to curb expenses here or there, or to stop projects,” he said.

“The minister is at liberty to find his own ways of going about the economic challenges but he knows the spending must be sustainable.”

Scicluna served as finance minister from 2013 to 2020 and took over the helm of the Central Bank in January last year.