Bleak times ahead for PN, Economist Intelligence unit report warns
James Debono Serious allegations against key ministers and internal dissent are among the major problems facing the Nationalist government, the Economist Intelligence Unit has warned.
“On the back of deteriorating economic conditions, a worsening fiscal position, internal dissent and serious allegations against key ministers, the governing Nationalist Party will face testing times in office,” the report published this week said.
Despite “rising dissatisfaction”, the report deems the likelihood of an early election unlikely, even if Prime Minister Lawrence Gonzi will find it increasingly difficult to push through any substantial reforms.
Moreover, the government will need to convince the European Commission to postpone the painful measures required to instil sustainability in public finances well beyond the deadline of 2010.
The report also notes that the way the government approved the extension of the Delimara power station has generated controversy.
The report presents a dire economic situation marked by weak domestic demand, a downturn in the property market and discontent over further hikes in utility rates which could increase the risk of conflict between government and social partners.
The report forecasts that the economy will contract by 3.2% in 2009 and GDP will remain stagnant in 2010 only to grow by 1.3% in 2011.
The EIU blames the widening of the deficit to overruns in recurrent expenditure.
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