Gordon Cordina has termed Malta’s Budget 2022, unveiled on Monday evening, as a “Budget for Social Investment.”
Providing his insights in a personal capacity to WhosWho.mt, the Bank of Valletta Chairperson, and seasoned economist, said there were four key factors defining this year’s Budget: COVID, economic resilience and challenges, and the socio-economic development perspective.
“The first is the impact that the COVID pandemic left on the state of public finances in Malta which will limit the extent of fiscal action in years to come,” he said.
“The counter side to this is that the economy is emerging from the pandemic relatively intact and ready to reap the benefits of the increase in activity which can be expected over the coming quarters and years. This is the second important dimension within which this Budget is formulated."
He then turned to the some of the mammoth challenges the economy will have to overcome in the short and medium term.
“The third critical consideration is the challenges which the economy is facing and will continue to face over the coming months primarily through the increase and prices of raw materials and other imports on which it substantially depends given its smallness and openness to international trade. The country’s greylisting is a similar factor in this regard,” he explained.
“Finally, from the social economic development perspective, the country is facing compelling needs to improve its performance with respect to the environment, inland transport and to social inclusion, all of which can be considered to be long-standing challenges in the wake of the country's economic growth over the past years, but which we are now facing with an ever-stronger sense of urgency,” he added.
Dr Cordina also reflected on some of the initiatives concerning Malta’s labour force and construction industry.
Here, he notes "innovative measures mainly aimed at making work pay", referring to the widening of Malta's in-work benefit. He added that measures included on enhancing the built environment are "aimed at Government action to address failures of the market through the provision of incentives".
He then explained that the efficient usage of resources in both the public and private sector will be vital to overcome macroeconomic difficulties facing the economy.
“From a macroeconomic perspective, the economy has to face the new challenges from the external environment, just as it has emerged, with a good degree of success, from the pandemic shock. Efficiency in the use of resources in public and private sector activities will be key to overcome these.”
Finally, addressing the implementation of the Budget, he posited that its success would depend on the effectiveness of implementation: “The success of the measures announced in the Budget will thus strongly depend on the effectiveness of implementation, monitoring, and enforcement activities in many spheres of economic and social life,” he said.