Introduction to Malta’s Economic Challenges
Malta, like most EU member states, is facing significant fiscal pressures in areas such as health, ageing, climate change, and infrastructure upgrading. The way the government spends money matters to most citizens, as it directly affects the quality of public services and the overall well-being of the population.
The Current State of Malta’s Economy
The budgetary indicators are still good, thanks to unprecedented economic growth stimulated by the mass importation of labour. However, this growth-at-all-costs economic model has led to increasing public expenditure way above what is considered prudent. The Central Bank of Malta confirms that the government’s net expenditure has been increasing at a rate more than twice the EU’s recommended limit of 5.9 per cent.
Understanding Government Spending
Governments typically use fiscal policy to promote strong and sustainable growth and promote social equity. In the short term, the government is not dependent on tax receipts to spend. Instead, it creates money in the economy by paying nurses, teachers, and investing in infrastructure. This concept may seem different from the way families plan their budgets, where households need income before they can spend. Tax is more like an economic steering wheel, guiding the economy rather than fueling it.
The Importance of Efficiency Indicators
Public expenditure that is not based on strict efficiency indicators can lead to imposing heavy burdens on future generations. While the country’s debt remains in check, with the debt burden comfortably under the 60-per-cent threshold set by the EU, the government must adopt key performance indicators that focus on how efficient this expenditure is. These indicators must include metrics for establishing whether the public is being given the right level of service from the public health system and whether money invested in infrastructure projects is reducing traffic congestion and productivity losses.
The Need for Transparency and Accountability
The Central Bank report remarks that part of last year’s rise in public expenditure is on one-off payments linked to the closure of Air Malta and the setting up of KM Malta Airlines. It is time for the government to update taxpayers on whether the public investment in the national carrier is achieving the set targets and whether the medium- and long-term economic prospects of KM Malta Airlines are still viable. As the 2026 budget approaches, the government needs to urgently make longer-term plans to promote sustainable economic growth and enhanced social equity.
The Cost of Unsustainable Growth
No amount of short-term economic gain will compensate for the irreversible degradation of our natural heritage. Taxpayers cannot be expected to foot the bill for vanity projects designed to inflate egos or shore up political popularity. Public spending should never be used to win votes through populist giveaways. The more-of-the-same economic strategies will not make Malta a better country. The level of public expenditure must always be judged by the extent to which ordinary people feel that they are being given value for the money they pay in taxes.
Conclusion
In conclusion, Malta’s economic challenges require a thorough examination of the government’s spending habits and a shift towards sustainable economic growth and social equity. The government must adopt efficiency indicators, prioritize transparency and accountability, and make hard choices to protect the fabric of society. By doing so, Malta can ensure a better future for its citizens and avoid imposing heavy burdens on future generations. The government must prioritize the well-being of its people and the environment, rather than short-term economic gains, to create a more equitable and sustainable society.
