In the midst of external factors impacting Malta’s local economy, very few options might be on the table other than to slash budgets to cater for more pressing priorities. Just recently, the Finance Minister Clyde Caruana stated that around one hundred million Euro has been reduced from the government’s budget. Details in relation to what this slash shall impact will be communicated later on in the year.
This move has been put forward so that the government can reach the targets that it set out for this year. Government is working to identify savings avenues which shall be explained during the Budget speech set to take place in October. This implementation of cost cutting measures is being spearheaded to reduce Malta’s deficit and work towards sustainability in a time where the whole world is going through a period of rampant inflation. One of the examples being reported is the University of Malta which had its budget reduced by 1.1 million Euro.
On these latest cuts, the Nationalist party has asked government to publish the details and advise what criteria are being considered. A statement by the opposition also highlighted that cost cutting should first take place on excessive spending made by ministers and those who are close to them.
The upcoming Budget is one which will attract attention especially when considering the economic difficulties being faced on both global and local levels. Prior to the events of the COVID-19 pandemic and the war in Ukraine, Malta held a healthy surplus which was driven by consistent economic growth.
Once the COVID-19 pandemic hit and Malta started to register its first cases, restrictions were implemented which hindered economic activity, and forced government’s hand to give subsidies, cushioning the impacts and slowing unemployment from going up. This led the country to a deficit and even as restrictions were being lifted, higher cost of living became the norm, as the problems related to shipping followed.
The supply chain bottlenecks caused a spike in prices on several items, impacting cost of living. These episodes were followed by the war in Ukraine which continued to contribute towards economic uncertainty and the increase in prices. Being a part of the world, Malta is also facing struggles with cost of living as families are feeling the pressure of the increase in expenses across the board.
Credit: DOi/Jeremy Wonnacott
Although costs have increased, the government has managed to sustain electricity bills which have skyrocketed in other countries within the world. The Minister for Finance Clyde Caruana, committed to maintain government subsidies so that Maltese families will not have to bear the brunt of even higher costs.
