Issue link: https://maltatoday.uberflip.com/i/1466490
NEWS maltatoday | SUNDAY • 1 MAY 2022 5 CONTINUED FROM PAGE 1 Burdening consumers with the exorbitant prices would lead to economic slowdown, the minis- ter said, adding that this will in turn create problems for public finances. However, he insisted the gov- ernment was also keeping an eye on the deficit. "I want to put everyone's mind at rest that I am giving priority to the deficit just as I am utility bills." Caruana said last year's deficit at 8% was less than the previous year and was forecasted to go down further this year. "I want to ascertain that the rhythm we picked up [of cutting the deficit] continues in the years ahead." Asked whether the additional outlay on energy subsidies will be balanced out with cuts in gov- ernment expenditure, Caruana said a review is underway. He said the economy was ex- pected to continue growing al- though projections have been revised downward and this will yield more income for the gov- ernment. "But I have started an exercise by which I am looking more deeply into government expenditure to see where we can be more judicious so that unnec- essary expenses are cut." Eurostat figures released a fort- night ago show that Malta regis- tered a deficit of 8% last year, the highest in the EU but less than what Caruana had been fore- casting. The EU suspended its excessive deficit rules during the pandem- ic to allow countries to bolster public spending on health and economic support. The rules remain suspended so far but last week Central Bank of Malta Governor Edward Scicluna said the government should, as early as possible, draw up a strategy to start gradually reducing the deficit. "It's important to protect the consumer as much as possible, every government wants to do that… The question is, can you afford it?" Scicluna told sister newspaper BusinessToday. He said consumers had to ac- cept the reality that some re- sources (such as gas and wheat) are scarce as a result of the war and the higher price serves as a warning to consumers to adjust their behaviour and use them more economically. "I am sure the minister is al- ready looking at, on the one hand, trying to protect the con- sumer as much as possible, but at the same time keeping an eye on the deficit and its future re- duction," Scicluna said. "The lat- er we address this problem, the bigger the challenge will be." Caruana had set aside €200 million to cushion the impact of rising energy prices when pre- senting this year's budget. How- ever, this was before the Russian invasion of Ukraine that has caused energy and food prices to spike. Enemalta's fixed price agree- ment with Electrogas came to an end in April at a time when gas prices are soaring. Additionally, the price of other commodities such as wheat have also shot up, prompting government to sup- port Maltese wheat importers with an outlay of €6 million. Food prices sky-rocketed in March, pushing the overall an- nual inflation rate up to 4.5%, according to the Harmonised In- dex of Consumer Prices (HICP) released by the National Statis- tics Office. The HICP showed that the an- nual inflation rate for food stood at 8.7%. Drive to cut 'unnecessary expenses' Caruana said last year's deficit at 8% was less than the previous year and was forecasted to go down further this year. "I want to ascertain that the rhythm we picked up [of cutting the deficit] continues in the years ahead."