Barely a day goes by without some set of statistics about the performance of the economy reaching the media. A superficial analysis is often made, possibly because many people do not care much about statistics. They use other means to decide whether they are better or worse off than before.
Journalistic and political spin has become an essential element of statistical analysis. The government has more than its fair share of spinners paid by public funds to make sure they milk every bit of apparent positive statistics.
The fact that in the last quarter of 2009 the Maltese economy was technically out of the recession was heralded with a loud fanfare by the Prime Minister and the Minister of Finance. They quickly summoned the media in order to share the good news.
The government and the media that supports it continued to spin the story that Malta avoided the unfortunate fate of Greece simply because it has a more than competent government. If only Greece, Ireland, Spain and Portugal had followed the strategy of the Maltese Nationalist government.
No such media gathering was organised when, in the same week, it was announced that in February of this year unemployment continued to rise. We are often reminded that our unemployment rate is much lower than that of most other eurozone countries, but we rarely hear about how low the employment participation level is in Malta and how long-term unemployment is growing.
More recently, we received the European Commission report on the updated stability programme of Malta for 2009 to 2012. One needs a little experience in reading between the lines and interpreting the style of writing of EU officialdom. Once again, most of the media failed to analyse with sufficient rigour the more salient points of this latest report on the government’s economic strategy for the next three years.
Clearly, the EC is less than convinced that the government has a credible plan for putting public finances on a solid basis in the medium term. Short-term tactics may appear to be working, but there are clear signs that the Gonzi administration is suffering from acute short sightedness in its medium and long-term vision range.
The EC reports quotes the following reasons that put at risk the medium and long-term viability of our public finances: ‘The [weaknesses of Malta’s fiscal framework] include the absence of binding expenditure ceilings; shortcomings in budgetary execution discipline; and limited integration of the medium-term strategy in budgetary formulation.’
The report goes further and attacks the credibility of the government’s fiscal plans for 2012 – which coincidentally is the year leading to the next general election. The report says: In 2012, the final year covered by the programme, the deficit ratio is again planned to broadly stabilise instead of making progress towards Malta’s medium-term objective of a balanced position in structural terms.
The report further warns: ‘The deficit and debt ratios could be higher than planned throughout the programme period, mainly due to (i) assumed tax buoyancy and, especially after 2010, a favourable macroeconomic scenario and (ii) possible expenditure overruns given the recent slippages, the scale of the envisaged retrenchment and the lack of information on concrete measures underpinning the targeted cut in he spending ratio over the programme period.’
Stripped of all euphemisms, the EC report is expressing doubts about the government’s ability to deliver what it is projecting and asserts that, as we edge towards the pre-election year of 2012, the government’s fiscal tactics become even more inappropriate for the achievement of fiscal soundness in the medium-term. Will we now hear the EC being labelled as ‘a bunch of downers’ and ‘promoters of doom and gloom’ by the PN spinners for daring to question the robustness of the ‘par idejn sodi’ in charge of our public finances?
Finally, the latest fiscal deficit statistics show worrying signs of a continuing fall in public productive expenditure. The PL has repeatedly highlighted the short sightedness of cutting public productive expenditure at a time of recession simply to keep the fiscal deficit from growing even further. We need to prepare ourselves for the time, which will hopefully be very near, when we see our economy start growing again. To improve our competitiveness in the post recession days we have, among other things, to invest more in the infrastructure.
Ordinary people have their own barometers to measure their social and economic wellness. Official statistics are, of course, important for business and political leaders and the media, as long as the analysis of statistics is not tainted with blatant spin and bias to hide the short sightedness of the current administration.
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