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9 EDITORIAL BusinessToday is published every Thursday. The newspaper is a MediaToday publication and is distributed to all leading stationers, business and financial institutions and banks. MANAGING EDITOR: SAVIOUR BALZAN EDITOR: PAUL COCKS BusinessToday, MediaToday, Vjal ir-Rihan, San Gwann SGN9016, Malta Newsroom email: bt@mediatoday.com.mt Advertising: afarrugia@mediatoday.com.mt Telephone: 00356 21 382741 T he post-pandemic recovery was al- ways going to be fragile and gradual in the face of continued internation- al uncertainty. Malta's fortunes are no different to those of other countries in mainland Europe giv- en the strong economic and commercial linkages that exist. Budget 2022, delivered by Finance Min- ister Clyde Caruana is a reply to the chal- lenges the country could expect to face in the coming year and beyond. It is important to first understand the context. After the scare created by a new COV- ID-19 variant in the summer that caused some countries to rethink reopening strat- egies, countries now face the prospect of surging energy prices that threaten to sti- fle industrial production and erode house- hold incomes. Port congestion and higher freight costs are also a worldwide problem. In Malta, the handling of the pandemic has reaped very positive results and if the situation remains unchanged, the remain- ing measures could very well be lifted in the next couple of months. With a vacci- nation rate above 93% and the rollout of booster doses underway, Malta has man- aged to keep the virus at bay. On the energy front, the country so far remains insulated from surging gas prices as a result of the five-year fixed agreement between Enemalta and Electrogas. But this expires in April next year and could usher in higher electricity prices for indus- try and households. And freight costs are a headache for im- porters and exporters. e budget makes it clear that Malta's investment on health services will remain strong and no punches will be spared in the fight against COVID. But the budget also addresses those areas in healthcare that fell back as a result of the pandemic, such as hospital waiting lists. On the energy front, Caruana has com- mitted to cushion any blow that may come Malta's way next year by pledging to in- crease the deficit by up to 1.4% of GDP. is is welcome news because it removes a major uncertainty for businesses that will be drawing up their plans for next year. On the issue of freight charges, the gov- ernment is pledging to extend the rent subsidy scheme to help companies that have invested in more warehousing fa- cilities to order in bulk in a bid to spread freight costs. But there are several other measures that provide direct and indirect stimulus to the economy. e reduction in the part-time tax rate to 10% and the extension of the advanta- geous overtime rate to cover a wider in- come bracket are important measures to energise the labour market. e in-work benefit for employees who work atypical hours will help retain Mal- tese workers in these jobs, while preserv- ing competitiveness. Similarly, the extension of the free child- care service to cover evenings and week- ends will benefit employees who work on a shift basis. e start of a process to decouple pen- sions from income derived from work will encourage pensioners to continue work- ing. At an enterprise level, the introduction of a tax incentive scheme for profits that are re-invested in eligible projects and the temporary measure that will allow capital allowances to be shifted between com- panies in the same group, will encourage companies to invest. A disappointment is the lack of imagina- tion in the tourism sector where no new funds have been committed despite gov- ernment anticipating a pick-up in arrivals. Budget 2022 provides a stimulus but it also looks ahead to ensure the fragile re- covery is sustained and strengthened. Sustaining and strengthening a fragile recovery 14.10.2021

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