Issue link: https://maltatoday.uberflip.com/i/1541360
5 maltatoday | SUNDAY • 16 NOVEMBER 2025 INTERVIEW The following are excerpts from the interview. The full interview can be found on maltatoday. com.mt as well as our Facebook and Spotify pages. PHOTOS: JAMES BIANCHI / MALTA TODAY You described Budget 2026 as one that trades fiscal margin for social stability. Is this sus- tainable? I think we're pretty much at a crossroads as an economy. Over the past few years, the government's main aim was ensuring social stability, supporting families, protecting them from the external crises that were happening. Government was very focused on ensuring that purchasing power remains strong. In this case, the budget is a continuation of that trend, right? We've seen tax cuts, we've seen other increases in pensions and social allowances. We're seeing this continuation and, I would say, maybe too much focus on ensuring domestic demand, domestic consumption. This most probably has been one of the main economic drivers of our results. Now, I think the economy needs to shift much more to higher productivity, higher value added, and to ensure that we remain resilient to the changes that are happening externally and that will continue to happen. We now need to really focus on the structural challenges. Did this budget start address- ing those issues? The budget is not the beginning and the end of any economic debate. It's one of a number of economic documents. We need to see the economy or the economic model as being influenced by a whole number of policies and strategies. I think what remains missing in the country is this holistic plan. I mean, Vision 2050 sets the foundations for that. It's still under consultation. Consultation closed a couple of weeks ago, so we're still waiting for the final version to be released. But I think there is scope for much more coherence, a holistic vision and strategies coming together. Tax is treated like a plague nowadays. Is this a good thing? Ultimately the economy is subservient to humans, and humans by nature are driven by incentives: We avoid pain, we prefer pleasure. This is where I think political maturity needs to prevail. Tax at the end of the day is not a plague. There are some taxes which are necessary to start shifting behaviour. Humans react much more to a negative nudge than to a positive nudge. I think what might eventually make sense is that the negative nudges, these taxes, the money collected, are ring-fenced then for improvements in that particular area. If you're talking, for example, about a nutrition tax, then those funds are ring-fenced for sports infrastructure, for improving access to food, food security. People need to see the direct benefit of the money being taxed into being given to them, then in a positive externality or in a positive way. It's a shift that will take its own time because unfortunately, as we discussed, taxes have become a new plague. Does rising public debt pose a risk? I think the discussion needs to be much more focused on fiscal space. The discussion on government spending needs to be on the quality. What are we getting out of that expenditure? Debt is not inherently bad; everyone goes into debt and there is no growth without debt. The problem is if debt is there to sustain our current expenditure. For us to have a really meaningful debate on debt and fiscal space, I think we need to improve the information out there, even from a government accounting perspective, improve the information that is collected and the way it is presented. And over here, we need to speak much more on the net worth of the government, because debt, ultimately, though it's a liability, it is just one of many liabilities. We need to have a much broader discussion on net worth; on a real consolidated balance sheet for government. In the public sector, the balance sheet is everything, right? When we're assessing a company's health, we don't look at the profit and loss but at the balance sheet. In government, the balance sheet is fragmented. We don't have one balance sheet. I think the only country that does this is New Zealand. Its budget system is, I would say, the golden standard, because they have a well-being budget as well. But they talk about net worth. We talk about debt, but we don't look at the quality of spending. We talk about spending, but then we don't have impact assessments or post-spending evaluations. Did this programme work or not? If it didn't work, fine, scrap it, we'll change it. What are the feedback mechanisms into the budgetary process? Are we throwing money at a programme that doesn't work? Or are we seeing that if we shift our spending from this programme to another programme, the results will be better? It's easy to say, our debt is increasing, but we need much more. And I think this is something that most probably spans all the issues. Sometimes we're too superficial in our assessment of the present situation, and also in terms of discussing the solutions for the future. And I think we owe it, not only to ourselves, but we owe it to the next generation, right? We need to elevate the debate.