Government needs to strengthen the country’s regulatory framework
The Nationalist Party refers to two reports published by the International Monetary Fund: The Staff Report issued under Article IV of the IMF Articles of Agreement and the report entitled “Malta, Selected Issues”.
In its Staff report, the IMF notes that Malta’s economy continued to grow at a fast rate. This growth is largely due to the positive performance of the services industry. The IMF felt the need to call for “sustained efforts” to “safeguard the financial system’s integrity”. In this context the report called for a “robust implementation and effective enforcement of the Anti-Money Laundering framework”.
The Nationalist Party notes that the success registered by the financial services today is the result of the steps taken by successive governments to transform Malta into a financial centre of international repute.
Over the past four years, Malta’s reputation was repeatedly put at risk as a result of actions taken by government Ministers and high officials and by the relevant Authorities apparent inability to effectively deal with suspected cases of abuse.
It is within this context that the IMF felt the need to call on the government to ensure that the country strengthens its regulatory framework. In so doing, the IMF is mirroring the calls made by the Opposition, independent media and civil society over the past months.
The Staff report also notes that government’s financial position has improved buoyed by the positive economic performance and proceeds from IIP. On the latter, the IMF called on government to achieve a positive balance net of IIP proceeds. This call came ironically two days after the Prime Minister pledged to base Malta’s economic future on the IIP programme.
The Opposition has over the past months highlighted the risk of government’s strategy to rely heavily on revenue proceeds from IIP. These proceeds allowed government to camouflage rapid increases in government’s recurrent expenditure. This expenditure was in part driven by reckless increases in the public sector headcount. Contrary to government’s assertions, the additional workers were not recruited in the crucial health and education sectors.
It is very telling there is industrial unrest in both the education and health sectors, industrial action that is a direct result of government’s lack of vision for these sectors. With regards to health, government’s privatisation programme was nothing short of a botched exercise that led to precious wasting of public resources.
In the “Malta Selected Issues Report” the IMF called on government to increase its capital expenditure without putting pressure on public finances. Over the past years, government capital expenditure to GDP ratio was the lowest on record.
The Nationalist Party calls on government to give serious consideration to the points put forward the IMF not least by ensuring that the State’s Authorities truly operate independently from government, government’s recurrent expenditure is kept under control with the resultant savings invested in capital projects.
The Opposition also calls on government to do take all necessary steps to start repairing the damage done to Malta’s reputation.
Mario de Marco
Spokesperson for Finance