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5 NEWS 27.10.2022 In the three years preceding the COVID-19 pandemic, Malta recorded a current account surplus averaging 5.5 per cent of GDP, underlined by a strong service net export balance. However, the COVID-19 pandemic negatively impacted the current account balance leading to a current account deficit in 2020 and 2021. During the first quarter of 2022, Malta has similarly recorded a current account deficit, although this has decreased significantly from the previous quarter by 4.1 percentage points. percentage of trade in goods REACTIONS TO BUDGET 2023 Budget focused on short-term stability - MEA THE Government Budget for 2023 lacked a long-term economic direction, including a clear human resources strategy, the Malta Employers Association said. e MEA said while the budget speech addressed the immediate issues, which might be understandable in an uncertain global situation, this has to has to accom- panied with a longer term economic direc- tion. is should include a clear human re- sources strategy which should follow the exercise of the census of skills, together with a plan for economic transformation to maximise the country's economic potential whilst safeguarding the people's quality of life. "On a macro scale, the main feature of the budget is government's decision to shoulder increase in fuel, energy and cereal prices on businesses and consumers to maintain eco- nomic stability and price competitiveness," the association said in a statement. "is is fundamental in a global scenar- io where many countries are experiencing rates of inflation which have been unheard of for more than 40 years." e MEA said the budget adopted a tar- geted approach, ensuring discipline in gov- ernment expenditure whilst taking active measures to support family income with- out undue burdens on businesses. is ap- pears to have taken precedence over capital expenditure. "Government is fine tuning numerous social benefits to spread a feel-good factor among a large cross section of the popula- tion," it said. "It has announced numerous business incentives for better regulation and technical support to adopt ESG crite- ria in business, and also digitalisation and internationalisation." MEA noted that in the current situation, government does not have much room for fiscal manoeuvrability, and for the fis- cal targets to be attained, it becomes even more imperative that government exercises discipline in its spending, and to curtail un- necessary expenditure such as unproduc- tive employment in the public sector and extravagant activities of dubious national benefit. It welcomed the minister's announced ob- jective to have a viable national airline and said that for such an objective to be real- ised, the airline must be run on a commer- cial basis, free from politically motivated interference. THE Gozo Business Chamber said it had expected the government to in- clude a specific incentive package for the Digital Innovation Hub in Xewkija in its Budget for 2023. The Hub is presently severely un- derutilised and further impetus on such an important investment would have been expected, it said. The Chamber said it was aware that the budget must be taken within the context of the COVID-19 pandem- ic and the war in Ukraine, which has resulted in a significant inflationary push especially with regards to energy prices. To this end, the Chamber said it ap- preciated that the Government is ab- sorbing the surge in energy prices. "Nonetheless as an island region Gozo has distinct needs and poten- tialities, and this perspective should underline the analysis of this budget," it said in a statement. The Chamber welcomed the fact that the positve impetus towards sus- tainability and digitalisation is being retained. It welcomed news that Gozitan com- panies which invest in sustainable and digital business models will be re- ceiving an additional 10% tax credit, which credit will be increased to 20% if companies invest in projects which reduce their carbon footprint. It also noted the assistance that will be provided to business units to adapt themselves to the ESG (Environment, Social, and Governance) criteria, and the additional €2,000 for Gozitans who scrap polluting vehicles. As regards incentives which are spe- cific to Gozo, the Chamber welcomed the retention of a more favourable tax regime in Gozo for persons buying properties in urban conservation are- as, and the newly announced scheme to attract long-stay tourism to Gozo. "With respect to connectivity the Chamber also notes positively Gov- ernment's guarantee for a regular and scheduled fast ferry service between the two islands, and also the contin- uation of the project of the rural air- field," it said. "Within this perspective, it is impor- tant that the project for the perma- nent link between the two islands is not discarded." The Chamber said long-term plan- ning is a necessity for a country which intends to continue to grow and move forward. To this end long-term projects such as the permanent link should remain on the country's agenda. Significant work has been done in this area, and it is important that the impetus gained along the years is not written off, the Chamber said. It said that the request for expression of interest for the permanent link pro- ject had been issued on a design, build and finance basis. This means that this project would have had no impact on the public cof- fers. The Chamber insisted that other necessary and urgent infrastructural projects such as the car park in Victo- ria, and a new hospital for Gozo need to be started. Moreover the project of the old peo- ple's home needs to be continued. "It is important that these projects are not shelved, while noting that the project on the aquatic centre and the new museum will continue," it said. In its budgetary document the Chamber had pointed to the need for the taxation rate for both part-time and overtime to be aligned. While the Government has reduced both tax rates, there remains a dif- ference of 5%. Moreover, the reduced rate for overtime work applies for a maximum of Euro 10,000," it said. The Chamber said that in a situation where companies in Gozo are finding it extremely difficult to recruit new employees, this difference and the threshold for overtime work, make it more worthwile for employees to seek part-time employment rather than work overtime with their present em- ployer. The Chamber said it had expected such a situation to be adjusted to re- flect the new realities employers are facing. Gozo Business Chamber wanted incentive package for Xewkija Digital Innovation Hub in Budget for 2023

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