A €1 billion EU aid package sounds great on paper but Finance Minister Edward Scicluna has warned that the deal on offer could end up being a poisoned chalice for Malta.
“The government is aware of the advantages of being part of the EU’s single market but we’re also realistic and know the national interest must reign,” Scicluna said on Pjazza last night, stating that the crux of the matter is how the loans will be repaid.
“Treating this package as though it were a Christmas stocking filled with goodies would be fantastical.”
The European Commission’s proposed €750 billion COVID-19 recovery fund, presented last night, is believed to allocate Malta €642 million in loans and €350 million in grants.
However, Scicluna said Malta’s financial situation is strong enough that it doesn’t require loans from EU bodies but can turn to local institutions and investors instead.
“We hope that this package works out and our EU neighbours get back on their feet, but if it gives out money, it will be through loans, which means they will have to be repaid,” he said.
“If someone’s going to dig their hands into their pockets and give us grants, then sure, but we don’t want to hear that future generations will make good for the debt. Countries like Malta don’t enjoy hearing the EU say that the debt can be repaid over 30 years.”
Moreover, he warned of a more insidious danger in that certain countries could want to raise money for loan repayments through tax harmonisation among EU member states, something which would severely damage Malta’s competitiveness.
“I enjoy eating prickly pears but there are so many thorns that you must be careful when eating it. We’re aware of the thorns and we know who’s promoting them.”
Cover photo: Right: LIBER Europe