Local economy is deteriorating fast – Labour MEP Edward Scicluna

Labour MEP Edward Scicluna said the financial situation in Malta is deteriorating fast. He said during a press conference that in the first qaurter of 2012, the debt ratio not only did not stop rising but increased to 75% as estimated using the GDP for the last four qaurters including Q1of 2012.

Prof Scicluna said that according to his calculations the deficit has surged to 5.5% of the GDP in Q1. The MEP said that the second quarter is looking worse. He appreciated the fact that the Government revenue will rise more at the end of the years but said that it is going to be very difficult for the government to control the sitaution and Malta will probably fall back to the excessive deficit procedure under EU rules. He also said that this will effect future government workings.

Prof Scicluna critisezed the Government that so far it managed to avoid the wrath of the Commission because it has made many good promises in the documents submitted to the commission. He urged the government to publish the documents, like the national reform programme submitted to the EU in April during the European Semester (see explanation) which should have been the pre-budget document.

How does European semester work?

This new cycle has several stages:

The new six-month cycle will start each year in January when the Commission publishes the Annual Growth Survey (AGS), to be discussed by Council formations and the European Parliament ahead of the Spring meeting of the European Council in March.

At the Spring Council, Member States, essentially on the basis of the Annual Growth Survey, will identify the main challenges facing the EU and give strategic advice on policies.

Taking this guidance into account, the Member States will present and discuss their medium-term budgetary strategies through Stability and Convergence Programmes and, at the same time, draw up National Reform Programmes setting out the action they will undertake in areas such as employment, research, innovation, energy or social inclusion. These two documents will be then sent in April to the European Commission for assessment.

Based on the Commission’s assessment, the Council will issue country-specific guidance by June and July and possible country-specific guidance to countries whose policies and budgets are out of line (for instance, if their plans are not realistic in terms of macroeconomic assumptions or they don’t address the main challenges in terms of fiscal consolidation, competitiveness, imbalances, etc).

Each July, the European Council and the Council of ministers will provide policy advice before Member States finalise their draft budgets for the following year. Draft budgets will then be sent by Governments to the national Parliaments, which continue to fully exercise their right to decide on budget. In other words, this new framework represents in no way a limit to the sovereignty of national parliaments.

 

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