As the Minister for Finance Edward Scicluna embarks on his annual marathon which plans out the way the country’s finances are going to be meted out in the following year, political observers have indicated that the deficit in the accounts will be a major hurdle.
In his introduction to the budget, Minister Scicluna said that the most important thing this year is that this budget has to be seen in the context of the pandemic and its impact on the global and as well as the Maltese economy. He said that other European countries such as the UK, France, Italy and Germany too have projected deficits of an average of 6% and these countries have an additional problem of considerable public debt. Minister Scicluna predicted that Covid-19 will create a wedge between the countries.
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No new taxes
While Malta currently has a GDP debt ratio of 55%, this figure is set to rise to 59% in 2021. However, said the minister, on balance, Malta has still got room to maneuver. He insisted that Malta is flexible as the surplus in the last years will help to ease the debt ratio. The government, said Minister Scicluna, can continue its economic and fiscal policy without introducing new taxes. This, he said, will give a certain stability and attractiveness to business, since the investor will not have to be concerned about an increase in taxes.
In the introductory part of his speech, Minister Scicluna said that in 2021, the real economic growth is set to be at 5%, while nominally it will be around 6.4%.
The overall budget spend will be dominated by expenditure in infrastructure and in family benefits. He said that the help to families will surpass €100 million in benefits excluding wage supplement.
All measures unless otherwise stated will come into effect on the 1st of January while February will be a stock-take month.
Government not to introduce or increase taxes to give the country stability and render it more attractive to foreign direct investment.
Deposits with banks have increased and that enables government to maneuver in what the minister described as a marathon.