Finance Minister Edward Scicluna has come out in stark defence of three reports which warned of challenges facing the country’s long-term sustainability but found that Malta’s economy and banking system remain strong and stable.
“The government recognises that there are challenges, but the broad picture is positive,” Scicluna said, echoing Prime Minister Joseph Muscat’s comments to One Radio on Sunday.
Scicluna noted that, contrary to the doom portrayed by the Opposition and some sectors of the media, the executive summaries of the IMF’s annual report, the IMF’s FSAP and the EU Commission’s Country report all praised the country’s sound economic growth, job creation and improving public finances.
He also insisted that the infrastructural challenges, rising housing costs, and the shortage of labour and skills that were highlighted by the IMF, were already being addressed by the government.
“The reports only speak about gaps or shortcomings. Progress is being made and we are getting there”
Shortcomings in the banking system were highlighted in the reports, namely issues surrounding money laundering, enforcement, and the overall framework.
“The banking sector and capital base remain sound and profitable; with ample liquidity, and the reduction of credit risks,” Scicluna said.
He added that the FSAO report, which was last done in 2002, had in fact placed Malta’s banking system under a stress test and found that it would be resilient in a “worst case scenario”.
“Urgent action is being taken. We are working relentlessly with the best consultants over the issues. But we need to make this clear, Malta has inherited these problems from the past and we know that in they need to change. We will leave a better system for future generations.”
“We are the only ones who are willing to take on these issues head on,” Parliamentary Secretary Silvio Schembri added.
Schembri also addressed questions regarding the effectiveness and operational independence of the Malta Financial Services Authority that were raised in the report.
Outlining specific changes being made, he highlighted that a rigorous transformation of the MFSA to address the recommendations, which will significantly improve its efficiency, was already underway.
Scicluna conceded that sustainability was “a daily issue” when asked by Lovin Malta whether he was concerned over the sustainability of the Maltese economy, particularly in the housing sector.
“The country is facing big challenges ahead”
He did stress that diversification was key in ensuring sustainability, noting the strides made within the blockchain, cryptocurrency, and AI sectors.
“We are at a completely different point from where we were in 2013,” Schembri finished.