Public finances in "total chaos" – Charles Mangion

MLP Deputy Leader Charles Mangion yesterday branded Malta’s public finances "a total chaos", saying the country’s public debt had risen to Lm1,230 million after July registered an increase of Lm43 million in debt. The level of public debt as a percentage of GDP had reached a staggering 70 per cent. As public debt soars mightily over the billion mark, Mangion appealed to government not to consider introducing new taxes as it had promised in the last budget.
"Government is facing a reality it was previously hiding", Mangion said, where the economic slowdown Finance Minister John Dalli had announced was seriously contrasting with one of the PN’s electoral chants that the country’s finances were "on solid ground"
In these first six months of the year, Government revenue increase by 0.1 per cent Mangion said, "a sure sign that there has been no economic expansion."
"The fact that government revenue will be Lm25 million less than what was predicted, shows government’s aims in its 2003 budgetary estimates have failed," Mangion said.
Mangion said recurrent expenditure had increased by nine per cent (Lm30 million), showing "lack of competence". He asked where so much of this recurrent expenditure was being channelled to as wages and salaries had remained the same whilst social benefits had increased by Lm9.1 million. Substantial increases were registered in public sector operations (Lm5.6 million), public sector contributions (Lm5.6 million) and the public-private partnership (Lm2 million).
Mangion asked whether any form of cost-benefit analysis had been performed in the new public sector initiatives for the creation of new authorities, and whether the state’s restructuring programme was living up to its aims.
"This means the deficit has increased to Lm113.7 million when this had to be Lm75 million. This means a deficit of 7.7 per cent of GDP, miles away from government’s 3 per cent target according to the Consolidated Account Structure estimates."
Government had failed to ensure economic growth, fiscal efficiency and to reduce recurrent expenditure, Mangion said, pondering whether government would be suggesting any alternatives or if it had fallen out of ideas as it faces this economic reality.
Mangion said the MLP the believed a monitoring team within the Ministry of Finances to plan expenditure and revenues for the next five years within public entities and government departments, and to ensure a deficit-reduction target of 1 per cent every year. Mangion also said there was great need to reduce bureaucracy and commence benchmarking exercises in the public sector.
"When one considers the state of our public finances," Mangion said, "it is clear that the PN’s electoral promises were just a gimmick, as is the promise that economic growth would increase by three to four per cent.
"An economy does not work on gimmicks but through commitment and serious measures for the control of public expenditure, accountability and cost-benefit analyses of government activity. The many promises of a new spring today have exploded into nothing because government had proved itself to be incompetent and directionless."