Updated 12.10pm, adds details from the document

The government is expecting to continue registering a deficit in 2021, Finance Minister Edward Scicluna said on Wednesday, admitting the future is still uncertain as the world continues to battle the COVID-19 pandemic. 

In a press conference launching the pre-Budget document, which will be shared with social partners later on Wednesday, Scicluna said the economy will not recover by December. Health authorities around the world have suggested a potential vaccine against the virus could be rolled out by the end of the year.

“It is not true that come December, everything will be over. The pandemic and the closures resulting from it have had an unprecedented impact on our economy. 

“We are now studying the next phase to make sure we keep supplying oxygen to our economy,” Scicluna said. 

The government, social partners and civil society now need to work together because these are “not normal times” as the world is dealing with “an unprecedented crisis”, Scicluna said, though he did not elaborate on this and what it might involve. 

But although there were many uncertainties as a result of the constant changes, one thing the government can definitely commit to is support smaller businesses, the minister said. 

“Big hotels, for instance, would not feel the impact of capping as much as smaller ones. That is why the government will continue to support them until the last day of the pandemic,” the minister said. 

On economic growth, Scicluna said the first three months of 2020 were “good” because the country had yet to enter partial lockdowns. The second quarter was comparable to that in other countries. 

The minister noted that although sectors like i-Gaming, services and construction continued to do well, the impact of the pandemic on tourism had a “massive effect” on the economy. 

The unemployment rate did not spike, Scicluna said, though he acknowledged there was an impact on active ageing, with a number of people who had reached a certain age retiring. Had it not been for the pandemic, they would still be working, he said, adding the government encouraged people who were still able to work to do so. 

A number of people were also out of the labour force because they left the island. This, coupled with the increase in elderly people retiring, resulted in the unemployment rate low, he said.

What does the document say?

Though figures are still being calculated and are, therefore, limited at this stage, the document outlines the areas that the government plans to prioritise in the upcoming budget. 

These include: the economic sectors, new technology sectors, Gozo, education, employment and quality life for all, social welfare and the communities, national security and foreign affairs, the environment and the infrastructure, as well as governance, rule-of-law and combatting financial crime. 

In 2021, the government will be drafting a vision for the Maltese
economy for the next 10 years while a strategy will be presented for the
upcoming three years.

It will also embark on a seven-year investment program of €400 million,
which shall translate into the upgrading of industrial infrastructure and the creation of new office spaces for new business models.

Sustaining small businesses in Malta and Gozo will continue to be a priority through schemes aimed at exploring new markets, encouraging telework initiatives, bolstering their investment initiatives, and helping start-ups with the implementation of their innovative projects.

A study will be carried out to identify the e-commerce needs of small and medium sizes enterprises for them to be able to sell their products online locally and internationally.

A framework to make Malta the natural choice for start-ups wanting to operate in Europe will be designed. 

“The government retains its commitment to keep on exploring and attracting investment from the Medical Cannabis Industry, an economic niche which has a huge potential to contribute,” the document reads. 

‘Bold’ decisions needed at Air Malta

On Air Malta, the government said it had to take “bold decisions” for its long-term sustainability. 

“The government aims to strengthen the national airline in such a way that it will be able to compete in this new era. Air Malta will be investing in new emergent technologies aimed at bringing about a closer relationship with  customers and putting our national airline at the forefront in the use of technology.”

The government’s primary strategic objective for tourism in 2021 will be to continue “working relentlessly to revive the travel and tourism industry” for the benefit of the whole economy. 

Its main aim will to minimise “as much as possible” the recovery period with the aim of returning to 2019 tourism levels “as quickly as possible” and will continue to try to entice airlines to establish routes to and from Malta. 

Targeted marketing strategies aimed at encouraging tourists to come to the island will also be unveiled in the coming months, according to the document. 

More changes to raise standards of construction industry

Changes will continue to be implemented to raise the standards of the construction industry, the government is pledging. 

The Building and Construction Authority will be set up along with the necessary laws that will regulate the sector amongst which are the National Building Code, Licencing of Building Contractors and Obligations of all stakeholders in the Industry.

“Next year will also see the whole cultural sector having a new policy which shall present a new vision that will guide it into the new decade. Culture and the creative industries have become a strategic sector to boost competitiveness, productivity, employment and sustainable economic growth.”

More focus on sports, culture and the arts in schools

The government will increase focus on issues relating to the environment, sports, culture, the arts and community involvement in the educational field to improve students’ ability to become active participants in society. 

It will also introduce more online courses and blended learning as an incentive to encourage people with low digital skills undertake further studies.

The upcoming budget will also include further initiatives aimed at enhancing inter-modality by including more cycle lanes and by offering incentives for the use of bicycles and scooters as an alternative mode of transport.

“Clean transport initiatives for the use of less polluting vehicles and to encourage more use of public transport will be in the offing. Plans are also underway to exploit the potential of the Grand Harbour, through the regeneration of the different sites of the harbour in order to maximise its economic potential.”

The potential of sea connectivity, whereby ferry services connecting different localities, including Gozo by sea, will be “further strengthened”.

The document can be read in the pdf link below.