Issue link: https://maltatoday.uberflip.com/i/1501168
the highest numbers of asylum seekers in the EU. [...] "'Politically it's impossible to go ahead without Italy,'" said an EU diplomat, speaking on the condi- tion of anonymity. "It is the EU country that symbolizes migra- tion'." Got all that, folks? So not only has Giorgia Meloni herself been 'reinvented', to make her sudden- ly appear a good less 'far-right', than (let's face it) we all know she really is... ... but she is now even sin- gle-handedly dictating the Euro- pean Union's entire policy, on... 'Asylum and Migration', of all bleeding things! Around the only area of government policy, where Giorgia Meloni has actually stuck to her 'far right' guns – and tena- ciously, too! - ever since becom- ing premier, in 2020. Can anyone be surprised, then, to discover that – on closer scru- tiny – this new EU agreement happens to fulfil EXACTLY what the Far Right has always been de- manding... on what is arguably the most contentious aspect of all? i.e., the question of whether – and under what circumstanc- es – failed asylum seekers can be returned to their countries of origin? Once again, this is how Politico describes the scenario: "Rome's push to broaden the number of countries the EU considers safe enough for denied applicants was [initially] met with German opposition. In the end, an 11th- hour compromise gave EU mem- bers more wiggle room to return migrants to safe' countries, and ultimately pushed the deal to the next stage. "[...] in a key concession to It- aly, individual countries will be free to decide whether a foreign country fulfils such criteria. [...] "It's up to the member states to make a decision on whether that is enough for the connection cri- teria," [Swedish Migration min- ister] Malmer Stenergard said..." In other words: from now on, it will be up to individual countries such as Giorgia Meloni's Italy (or Robert Abela's Malta, for that matter) to 'decide' for themselves which country constitutes a 'safe port of call', or not... notwith- standing the fact that both those countries (and others beside) have a whole history of illegal cases of 'refoulement': the techni- cal term for 'returning migrants to manifestly UNSAFE destina- tions' (such as, for instance, Lib- ya)... ... not to mention the fact that at least one of those countries – Malta – has actually faced in- fringement procedures, in the past (initiated by the European Commission, if you please), over what – until last Thursday, at precisely 3pm – used to be con- sidered a 'human rights viola- tion'. But then again: with this new, 'Giorgia Meloni'-approved EU Immigration Pact firmly in place... all that's suddenly be- come 'legal' again, hasn't it? Just like the Far Right has always wanted; and just like it has now evidently been handed, on a sil- ver platter, by none other than the European Parliament itself. Almost makes you wonder, though, doesn't it? Who's the real 'Fascist', now...? ONE of the roles of government is to support the economy. In Malta, a policy tool which has been used over the past years is the distribution of financial assistance to eligible households via cheques. This is a temporary fiscal measure whose objective is to raise household income and hence support spending. The assumption is that the physical distribu- tion of cheques acts as a stronger nudge on eco- nomic behaviour compared to other channels. The approach of offering tax refunds, as op- posed to the outright reduction in the tax rate, also carries the benefit that it makes it easier to reverse simply by not repeating this measure in future. The government estimated that in May 2023 the number of beneficiaries from the tax refund will amount to around 250,000 at a cost of some €26 million. Bank of Valletta has a balance sheet size com- parable to the entire GDP of Malta. This offers the bank a great opportunity to explore eco- nomic behaviour in Malta since its operations are closely linked to the over- all financial transactions carried out in the country. As a result, it is possi- ble to generalise findings from internal databases to the rest of the economy. BOV considers it useful to share such data as a fur- ther source of economic information about Malta. Here we are presenting some statistics and in- sights in relation to last year's distribution of gov- ernment cheques. Starting from mid- March 2022, two sets of cheques were distributed to eligible persons in Malta. These cheques con- sisted of a tax rebate and a payment to workers and pensioners to ease the burden caused by the spike in inflation. In the first set, the value of cheques ranged between €60 to €140, with the lower income workers benefitting from the higher rebate. In the second set, the payment amounted to ei- ther €100 or €200, the cohort depending whether one was a worker or else a pensioner or on social benefits. The budgeted amount for the com- bined initiatives was in the region of €70 million, distributed across some 580,000 cheques. As a result, the number of Government cheques which BOV processed increased sig- nificantly in March 2022 and in subsequent months. The transition towards greater use of technology was confirmed. Indeed, the pre- ferred encashment channel was via ATMs or express deposit facilities, which accounted for some 90% of the total cheques which were dis- tributed by the government. Only around 10% of encashments were over the counter at a BOV branch. BOV continues to encourage its clients to make the best use of technology, particularly through ATMs, since these are more efficient and less costly com- pared to branch encashment. Last year it took slightly more than four months for the cheque processing activity to re- turn to its normal levels after the surge seen in March. By the end of June 2022, approximate- ly half of the additional Government cheques were processed by BOV, consistent with the Bank's typical market share in this retail activi- ty. Some two-thirds of the excess cheque activ- ity was processed in March and a further one- fifth in April. These statistics suggest that most households were quick to cash their cheques, which is a de- sirable feature since the objective of such fiscal assistance was to sustain domestic demand, cog- nisant of the fact that low- er income households tend to have a higher marginal propensity to consume. An analysis using BOV data, based on ran- domised samples suggests that the clients who de- posited these cheques did indeed subsequently carry out higher monthly with- drawals or card payments compared to their normal patterns. The cohorts identified exhibited an increase in withdrawals across mul- tiple banking channels, with growth rates ranging between 18.0% and 8.4%. This indicates the exist- ence of a possible direct link between the fiscal initiative, and consumer expenditures in Malta. This supports the view that there was a posi- tive stimulus to demand which, along with oth- er factors contributed to the exceptionally high 10.1% real growth in private consumption in 2022, as measured by the National Statistics Of- fice in their 2022Q4 national accounts release (NR036/2023). Indeed, private consumption in Malta has fully recovered from the pandem- ic, and in 2022 reached a level which was 6.5% higher than in 2019. The views expressed in this article are those of the authors and do not necessarily reflect the views of Bank of Valletta. Issued by Bank of Valletta p.l.c. 58, Triq San Żakkarija, Il-Belt Valletta VLT 1130. Bank of Valletta p.l.c. is regulated by the MFSA and licensed to carry out the business of banking in terms of the Banking Act (Cap. 371 of the Laws of Malta). maltatoday | SUNDAY • 11 JUNE 2023 OPINION 11 Malcolm Bray and Reuben Ellul Dimech are economists forming part of the Data Insights and Economics team at BOV Malcolm Bray & Reuben Ellul Dimech Fiscal initiatives, cheque cashing behaviour and private consumption in Malta From now on, it will be up to individual countries such as Giorgia Meloni's Italy (or Robert Abela's Malta, for that matter) to 'decide' for themselves which country constitutes a 'safe port of call', or not... The approach of offering tax refunds, as opposed to the outright reduction in the tax rate, also carries the benefit that it makes it easier to reverse simply by not repeating this measure in future