‘Do You Expect Managers To Pay Employees And Increase Company Losses, Or Fire Them?’ Leading Valletta Developer Asks Following €1.8 Billion Stimulus Package
A prominent Valletta developer and entrepreneur has called for a change to Malta’s fiscal policy of favouring “indebtedness” onto companies, leaving them with only a few month’s cash reserves, as the government attempts to curb the fallout from a slowed-down economy.
Andrei Imbroll, the chairman of The VBL Group, has called for a more “balanced” approach to Malta’s economic vision after “12 years of living in a negative interest rate environment”.
“The measures put in place by the government of Malta yesterday are mostly directed at solving problems created by over a decade of a fiscal policy encouraging indebtedness – and the ones who gain most are the ones who are most in debt,” Imbroll said in reaction to a €1.81 billion financial package announced last night.
He spoke out about businesses, like The VBL Group, who have no bank debt and built their company out of their own equity, and the lack of incentives for companies to keep their staff in last night’s package.
“Now, in this situation, is it realistic for the managers to go to their shareholders at a time of crisis and ask them for money to pay employees and increase losses or is it more likely that employees are fired?”
His comments come after similar comments on incentives and emergency funding for staff payroll by the Chamber of SMEs, Chamber of Commerce, MHRA and the MEA.
He made the case that ever since the global recession in 2008, Malta’s companies have been on a path of re-investing, and not saving, profits.
“During and following the 2008 crisis, the various central banks globally flooded the markets with money by giving banks huge amounts of money at very low-interest rates,” Imbroll said.
“The goal was to prevent a total collapse of the system. However, 12 years have passed since 2008 and we are still living in a negative interest rate environment.”
In Imbroll’s view, this fiscal policy led to a culture of people and businesses not holding any substantial savings, leading them to reinvest the profits or distribute dividends, which is why so many Maltese companies may be ill-equipped to withstand the economic damage resulting from the global coronavirus pandemic.
“When profits are made, usually after several years of hard work, those profits are distributed as dividends and partially re-invested into the business for further growth, all while keeping a few months of cash reserves. Remember here, that a shareholder would have given you the money to put it at work… not to keep it at the bank at a negative interest rate,” he said.
What do you think of this Maltese entrepreneur’s views?
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