“Another positive certificate for Malta,” ONE News announced after Moody’s most recent update. Prime minister Robert Abela went further. He tweeted: “Best rating since 2011…. due to Maltagov’s strong debt affordability, economy’s resilience and institutional reforms”.
Abela’s bragging was a futile attempt to bury more bad news. ONE News was parroting Malta’s “successes”. But this is not the 1980s. Xandir Malta doesn’t monopolise the airwaves any longer. Only those loyal disciples who watch nothing but Labour’s propaganda machine were duped.
The real news, of course, was diametrically opposite. Malta’s outlook was relegated from stable to negative. Freeport Terminal Ltd, backed by Maltese government guarantees, was also demoted to negative.
This minor detail seems to have slipped the prime minister’s notice. And ONE News’ too. Moody’s, along with Standard and Poor’s and Fitch Group, is considered one of the Big Three credit rating agencies. Moody’s word is heeded around the world.
The negative outlook is another massive blow for Malta – but Abela is over the moon falsely bragging about his government’s latest “achievement”, while actively concealing the truth.
Moody’s report is a condemnation of Labour’s chaotic incompetence and dangerous disregard of reality. It lists the key drivers for the negative outlook. And in the process explodes the myths Labour diligently crafted.
The first key driver is “the significant increase in the government’s debt burden”. Abela couldn’t possibly let this embarrassing fact slip out, having successfully convinced the public of Labour’s illusory fiscal competence. But the report pulls the rug from under Labour’s feet.
It highlights “the sharp deterioration of public finances”. Labour boasted about Malta being the best in Europe. Instead, Malta’s deficit of 10.2% of GDP is the second-highest in the EU. It is also the highest amongst its A2-rated peers. Government debt has increased from 42% to 55% in one year.
What’s more? The deficit will rise further to 12.4% by December and government debt will rise to a staggering 66.4% of GDP – far higher than other A2-rated peers.
Yet Abela squanders public funds in shameless and illicit appointments of Party insiders. Charlon Gouder’s phantom job at the Arts council nets him €35,000 per annum.
Former Labour Minister Charles Buhagiar pockets tens of thousands in useless direct orders.
Labour septuagenarian Anthony De Giovanni was recruited as a full-time “junior lawyer” in the agency run by his own daughter, Katya, a Labour Party candidate.
Ex-One TV and former Labour Zabbar mayor Quinton Scerri was awarded €136,000 in direct orders and appointed part-time communications consultant with Agriculture Minister Anton Refalo.
That’s just revelations by The Shift from the past week. The blatant looting continues unabated even as the “sharp deterioration in public finances” is exposed.
The second key driver of Malta’s negative outlook is the risk to the post-pandemic economic recovery driven mainly by the botched handling of the tourism sector. The premature decision to open the country for mega-parties in 2020 and the offer of financial incentives for language students in 2021 led to further spikes of infection and the inevitable tightening of restrictive measures.
The government’s repeated U-turns and the gross mishandling of the COVID epidemic among language students resulted in thousands of cancellations. The negative publicity generated by “the kidnapping of language students” in Malta will linger.
Despite Abela’s false propaganda of his negotiating powers, Malta has been allocated a tiny portion from the post-pandemic recovery fund Next Generation EU. Malta received crumbs compared to the big slice of cake our tourism-dependent competitors received. Malta was allocated only 2.5% of its 2020 GDP compared to Cyprus’ 4.8%, Spain’s 6.2% and Greece’s 10.7%.
Moody’s views these funds as a key factor in mitigating the economic impact of the decline in tourism on economic strength.
The third and biggest key driver to Malta’s negative outlook was the FATF greylisting. Zammit Lewis’ claim that the sun will still rise has not impressed Moody’s. Quite the contrary. The rating agency said, “this poses further risks to the economic outlook for the coming 18 months and beyond”. Maintaining a stable correspondent banking relationship, particularly for US dollar transactions, will be an uphill struggle for our banks.
The report could not be clearer. Malta, it declares, needs to build up a track record of its supervisory framework. It must demonstrate “the effectiveness of this framework in practice which it may not be able to do in 12 to 18 months”.
Abela’s bluff is demolished. Couched in polite language, Moody’s is yelling: we don’t believe you. Show us you’re serious about fixing your rotten corruption, you’re never going to manage in just 18 months. The report points out that the additional regulatory burdens brought about by greylisting will eat into the profit margins of international investors and this “increases the risk that these entities will reassess their current and future business operations in Malta”.
In short, major foreign investors won’t stick around – they’ll pack up and go, taking thousands of jobs with them.
Moody’s doesn’t watch ONE News. “Moody’s would consider downgrading Malta’s ratings”, the report warns. “Evidence that the government is backtracking on its institutional reform programme or that this is not producing the intended results” will lead to further relegation of Malta’s status.
Instead of demonstrating his understanding of the report’s implications and his commitment to addressing shortcomings, what does Abela do? He shoots himself and the country in the foot. He concealed the true findings of the report, deceived the public and protected Zammit Lewis and co.
Instead of reassuring the credit rating agencies by acknowledging the problem and the massive task facing him, he simply distorts the report beyond recognition. What is a brutal condemnation is trumpeted as an unprecedented triumph – “the best rating since 2011”.
Moody’s seriously doubted Abela’s ability to get Malta off the grey list. Now they must be utterly convinced that with Abela at the helm it will never happen. They must be wondering, which part of “NEGATIVE” does Abela not understand?
When reality is crude, which is best – to hide it or to cook it?
A simple calculator no longer suffices to keep track of each and every €100,000 robbed from the public purse in direct orders.
They can hide and do whatever they want, don’t forget that their voters are GAHANS, so…no problem.
It has to be a surgeon by profession that analysed the economy of our country so well. Where are the Maltese economists? Do we have any? Have they nothing to say?
Economists and accountants are too busy masquerading around at conferences wearing suits and carrying attache cases talking to each other about how “professional” they are. They think that saying they are professional is an adequate substitute to being actually so. And let’s face, everyone and his brother knows which side their bread was buttered these last few years.
Excellent article. Thank you for exposing the spin tactics of this corrupt, incompetent, and above all dangerous government.
Its quite easy for Robert Abela to lie with a straight face. He has gotten quite a few lessons from Joseph Muscat. Apart from that he stands easy becuase he is addressing the gahans. But then we are not all gahans.
Moody’s report said (quoting from The Times)”….a failure to be removed from the FATF grey list within the next 12 to 18 months would also reflect negatively on Malta’s strength of institutions and governance.” Implies that it will take at least that time to have any chance of getting off the list. It pretty much kills BG’s claim that the PN can do it in three months. Such is the sad state of politics in Malta where despite a floundering government the Oppositon can’t come up with clear thinking on how to move forward.
Sorry, can’t follow this logic…..“a failure to be removed from the FATF grey list within the next 12 to 18 months…” implies that it will take at least this time to have any chance of getting off the list. Ridiculous argument Ivan.
I reckon that by the end of next year we will have double the debt in 2013, thanks to the “Surplus” Ta Joseph Muscat.
Excellent analysis. A perfect dissection of the present state of our economy.
Robert Abela looks at the covering of a deep wound, but Gahan like, he is unable, unwilling and scareful to go deeper and describe the wound and its implications as is.
No more talk of creative accounting surpluses, no more boasting about the fast decreasing debt to GDP ratio. No explanation that the main component of the GDP, is the remuneration to employees, which has been ultra grossly inflated with the uncontrolled increase in employment with the government and its agencies and the scandalous payments to an uncontrollable number of persons of trust, each receiving the equivalent of at least 5 normal employees. No reference to the substantial contribution to the GDP of the various EU funds, obviously not the one million Alfred Sant had led his Gahan partnership followers to swallow ‘hook, line and sinker’.
I recall the present finance minister recently, warning his Prime Minister that the concerning increase in the GDP is not attributed to expenditure on Covid, which has also been financed mainly by no other than the maligned EU, thanks to the efforts of the PN MEP’S David Casa and Roberta Metsola, but the uncontrolled expenditure of every government ministry, and this still before the illegal practice of pre-election jobs for votes. In fact, we should start emphasising ’employment’ and not ‘jobs’, because the additional employees are given practically no job to do. This is why the corrupt Joseph Muscat, had praised these employees for punching in, and leaving their workplace to carry out a second or third job. Joseph Muscat had praised them for being industrious, rather than wasting time doing nothing at their government place of work, and robbing the taxpayer in the process.
Nor has Robert Abela mentioned the increase in unemployment, despite the job hand-outs.
As regards financial services, the government does not have the guts to mention the number of companies that are either disbanding, or emigrating their companies to other jurisdictions. The MFSA is unnecessarily harassing company service providers, to show that it is working hard to disengage from its greylisting, and in doing so, it is placing unnecessary burdens on small company service providers, who would rather close down and suggest to their clients to move out, rather than run out of economic viability.
In the meantime no effort is done to bring the big defaulters, or rather crooks, to justice.
In brief, they are still strong with the weak and weak with the strong, and keep trying to satisfy FATF with ticking and bashing of checklists, rather than focusing on ensuring that the supposedly independent institutions, are speedily adopting enforcement, to start attacking the substance of what FATF is after.
Until then, forget getting on the white list, restoring our binned reputation and proving that we are no longer a harbour for the mafia, and a centre for money laundering, smuggling, human trafficking, and financing of terrorism sponsored by the State.