Issue link: https://maltatoday.uberflip.com/i/1335208
8 maltatoday | SUNDAY • 31 JANUARY 2021 INTERVIEW A new economic formula, to address new realities We have often heard political declarations, from the Prime Minister downwards, to the effect that 'once the COVID-19 pandemic is over, the economy will bounce back to pre-2020 levels'. Don't you think this is a case of 'wishful thinking'? When it comes to the economy, the most important thing is to al- ways give people and businesses a positive outlook for the future. The worst thing you can possibly do is say that everything is going to collapse; and that the sun will not rise tomorrow. Why? Because the economy is built on trust. If people have faith, and the government continues to provide support, there is no rea- son to doubt that the economy will recover… Naturally, this doesn't mean we don't face a serious challenge. I am perhaps the one government exponent who has a reputation for passing comments that jour- nalists least expect… In fact, you are said to have something of a reputation as a 'Prophet of Doom', within gov- ernment circles... Yes, it's true. I can't deny that I have that reputation, among my Cabinet colleagues. And it's mainly because, as much as pos- sible, I try to be factual, and loyal to the truth. The truth, in this case, is that the economy took a hit; there is no doubt about that. And it wasn't a small hit. If you look overseas, the tourism industry has been virtu- ally wiped out… More than 'taking a hit', the economy is currently on life support. And not everyone on life support, goes on to sur- vive… It is 100% true that the econ- omy is being sustained by gov- ernment support measures. But the fact is that the government's healthy financial situation, in- herited from the previous sev- en years, gives us elbow-room - more so than other countries – in which to manoeuvre. This gives me the peace of mind that we have enough time to get our economy back on its feet… How much room do you really have, though? The wage sub- sidies, for instance. How much longer can you realistically keep them going: one year? Two years? We certainly cannot keep the same rhythm up for two years, no. But the fact that there is now a vaccine… you might ask: am I expecting miracles from the vac- cine? No: but if there is one ad- vantage we have over other coun- tries, it is that we are small. So we can reach our vaccination targets more quickly than others... So you are optimistic that the economy can return to its for- mer levels? It will be a long road, certainly, and there will be setbacks and difficulties. As a ministry, howev- er, we are preparing ourselves to face these challenges – and there is a lot of work to be done – but, at the end of the day, there is also light at the end of the tunnel. Launching a consultation docu- ment this week, you questioned whether the time had come to introduce quotas – or some oth- er controlling measure - for for- eign nationals working in Malta. More than a question, however, it seems to indicate a rethink of government's economic strate- gy. Isn't this also an admission that you are expecting a down- turn in economic growth? No, not exactly. Everything that was done in the past seven years, was needed at the time to help the economy grow. And – to tie in with the previous question – this is what made it possible for us to sustain the economy in the present crisis. But you have to keep making a stock-take of the situation, which is consistently developing. And yes; today, there are certain chal- lenges, that didn't exist before. It is my duty to not only acknowl- edge those challenges, but also to address them. There are two ways to look at that: you could argue – as does the Opposition – that the pre- vious strategy was merely to increase the population with- out a long-term plan… or else, that the economy has grown as much as it could, and therefore has to slow down… No, no: neither one, nor the other. The recipe for tomorrow, is not the same as the recipe for yesterday. Before, there was need for the economy to grow to a certain size; but now, we need to find a formula – and it exists – to ensure that everyone enjoys the benefits of economic growth in the coming years. This recipe has to be different from the one we had over the last seven years… All the same, you yourself have argued that this crisis is 50 times worse than the financial crisis of 2008. Then as now, it has left government with a gap in its finances, which it some- how has to fill. How do you in- tend to fill that hole? Yes, there is a hole in our fi- nances. And it's not small. But under these circumstances, the While ruling out the living wage 'for the foreseeable future', Finance Minister Clyde Caruana remains confident that Malta's economic strength, coupled with the resilience of its labour market, will see us through the pandemic in the end PHOTO: JAMES BIANCHI / MALTATODAY