Tuesday, 27 August 2019, 15:13 Last update: about 1 hour ago
Malta’s budget is expected to be presented by mid-October, Finance Minister Edward Scicluna has said, while adding that the exact date has not yet been announced.
The Pre-budget document, titled ‘sustaining inclusive growth’, was presented by Finance Minister Edward Scicluna this afternoon, in preparation for the budget for 2020 that will be presented later this year. The government wants to focus this budget on the elderly and healthcare Scicluna said, among other things.
Asked if there is a plan to increase taxes or add on new taxes, he said that the government does not normally announce this at this time, and would rather wait for the budget and announce then. He said that he did not want to comment about taxation at this point.
Scicluna said that economic prosperity allows the government to continue to commit to policies that ensure greater social justice.
In the coming years, the government will continue to address the new challenges brought about by the rapid economic expansion so to ensure that economic growth is sustained, he said. “The strengthening of the public institutions including the justice system, as well as sustaining the investment in the health and education sectors, will remain a priority. The upgrading of the physical and digital infrastructure will continue to feature in future budgets as well.”
“The Maltese economy is a success story. We will ensure that this success is well-managed so that it continues to be enjoyed by all. In this regard, inclusion and integration are key. Indeed, we will nurture a society that cares.”[embedded content]
The document itself highlights the government’s priority areas for the 2020 budget. “The government will continue ensuring higher quality in healthcare services, while prioritising investment in education to sustain the improvements being achieved so far. It will also continue with its drive to strengthen the regulatory and supervisory institutions while focusing on making Malta a leading player in technological innovation as well as raising the quality of Malta’s tourism product offer.”
Asked about recent rises in price for fuel and milk, and whether the government has any incentives or plans to deal with this situation and help those who suffered as a result, the minister said the government is taking note of any economic changes, and watch them very closely. He said that the Central Bank’s remit itself is inflation. He said that any increases are noted “and we will see what effect the automatic mechanism will have on this, and whether there will be any additional measures required in the budget to address that.”
Reforms in the Justice System
The document highlights that the year 2020 should see the implementation of the separation of functions of the Office of the Attorney General through the establishment of the Office of State Advocate which will act as legal advisor to the Government. The legislation to set-up the new Prosecution Unit has been passed through Parliament.
“At the same time, the government is intent on implementing further aspects mentioned in the Venice Commission report on Malta, particularly those related to an improved system of Judicial appointments which requires the support of a two thirds majority in the House and the other subjects on which there has already been a first reading in Parliament. These, in all, cater for one third of all the Venice Commission proposals.”
Institutions and authorities
Apart from the enactment of legislation to transpose the fifth Anti-Money Laundering Directive, more initiatives will come into force from other regulations against fiscal evasion, such as the Base Erosion Profit Shifting Directive (BEPS), the document explains.
“The Government will continue with its drive to strengthen its regulatory and supervisory institutions. These institutions have been engaged in implementing a substantial number of initiatives… The international institutions are recognising the efforts and endorsing the improvements being made in this regard. The strengthening of the process of prosecution, where cases of money-laundering and tax evasion arise, will continue, with the setting-up of a specialised Financial Organised Crime Agency. The National Coordination Committee will spearhead further initiatives to be taken to ensure closer collaboration and sharing of information between the institutions.”
Innovative technology hub
The document highlights that the first licensed operators in virtual financial assets will soon start operating. “This will encourage further private investment in Malta, in turn creating not only high skilled employment but also bringing knowledge and other related positive externalities.”
Artificial Intelligence (AI) will complement blockchain, the document adds. “It can be developed into a new economic niche. Currently, the government is working on assessing how regulatory and fiscal measures can be used to strengthen Malta’s appeal as a hub for foreign investment in this sector, while identifying the underlying skill base and infrastructure needed to support AI.”
The document also highlights that the space sector holds various opportunities and investing in this area provides national and commercial interests. “The Government’s aim is to create a regulatory framework and incentives which improves Malta’s attractiveness and capability to capitalise upon commercial activities related to the outer space.”
It also states that the government will continue investing in the online gaming sector.
Social justice and social exclusion
The document states that the government will continue to mprove the quality of life for the people and protect the most vulnerable in society.
“The Government fully intends to make certain that senior citizens who have worked hard their entire lives enjoy a secure and dignified retirement, free of financial worries. Helping the elderly and vulnerable remains a priority, especially certain pockets of poverty and deprivation which inevitably occur. These tend to be elderly people, mostly single who are over 65 years old, and who have low pensions. Women who have had limited working lives and therefore fail to qualify for a pension are also negatively affected. “
The document highlights that further investment will be made to upgrade and enhance the health infrastructure. Among other things, “in the coming year, there will be a drive to improve the primary healthcare facilities to offer a number of specialised services in a more efficient and effective way.”
Other areas the government is focusing on include enhancing Gozo’s economic prosperity, continuing to improve road infrastructure, sustain the tourism industry success, quality education, youths and sport, the environment, gender balance in Parliament, and others.
General economic indicators
Economic growth continued to be broad-based as the majority of sectors recorded an increase in the gross value added, the document shows. The highest growth rates were recorded in the construction sector (12.0 per cent), the professional, scientific and technical activities sector (11.6 per cent), the real estate sector (11.3 per cent) and the arts, entertainment and recreation sector (9.0 per cent). Worth noting was also the growth in the wholesale and retail trade sector which grew by 5.0 per cent and the manufacturing sector, where gross value added increased by 3.5 per cent.
In terms of economic growth prospects, the document explains that the Maltese economy is expected to maintain its robust performance over the short-term horizon, with real GDP expected to increase by 6.2 per cent in 2019 and 5.7 per cent in 2020.
During 2018, the general Government recorded a surplus of €250.8 million, compared to the target surplus of €54.0 million outlined in the 2018 Budget.
The better than expected outturn mainly reflected a stronger than anticipated revenue outcome, which turned out €128.1 million higher than expected while expenditure was only marginally higher than expected. Revenues from taxes on production and imports were more buoyant than expected by €106.6 million, mainly reflecting a stronger performance in domestic consumption patterns and a significantly more buoyant property market. Market output also turned out €99.5 million higher than expected, while revenue from social contributions was €5.2 million higher than anticipated., the document read.
General government expenditure was marginally higher than projected by €9.3 million. Expenditure on intermediate consumption was €26.7 million higher than targeted, mainly reflecting higher than planned expenditure towards health and residential care, operations and maintenance expenditure, capital expenditure classified under this category of expenditure, and Government entities operating in financial intelligence, water and waste water operations. Higher than planned current transfers amounting to €20.4 million were primarily related to compensation payments, public social partnerships and EU own resources. Meanwhile, a €32.2 million lower than expected expenditure on social payments resulted from lower retirement pensions expenditure due to a lower number than estimated of beneficiaries entering into retirement.