Building a new prosperity – Prime Minister Robert Abela

The current economic environment makes it all the more important that we invest to provide certainty and stability. This is mostly because geopolitical tensions have led to a constantly changing environment which is making both families and businesses uncertain about which economic decisions to take.

Coupled with rising prices, particularly of essential goods and services, and the policy response of monetary authorities around the world, these tensions have changed the economic climate substantially.

Against this background, our priority and focus for Budget 2023 revolve around the principles of certainty and stability. Through our commitment to continue to ensure stability in energy and fuel prices, we shielded and will continue to protect families and businesses from shocks that are bringing many in other countries to their knees. Suffice it to say, that through this measure, we have managed to halve our country’s inflation rate, and make it one of the lowest in Europe. This year’s Budget also reflects our economic policy beliefs. Instead of tightening our expenditure and introducing austerity measures, this administration has announced the most ambitious investment programme ever. Capital expenditure is projected to exceed €920 million, with substantial investments to digitalise our public sector and to facilitate the green transition. We are determined to make the best possible use of public funds, including the 2.27 billion euro in EU money to aid these two transitions.

These decisions are ones we attribute a lot of importance to. Because, lest we forget, during the last global and economic recessions, we had an administration that cut back on public investment, which led our economy to become stagnant. On the contrary, we have made the conscious decision to instead increase investment as we believe that postponing digitalisation and decarbonisation would undermine our competitiveness in the long run.

Our Budget 2023 does not stop there. Beyond measures in the energy sector and public sector investment, it includes several measures intended to incentivise and encourage private investment. We will be doubling, to up to €100,000, the cash grant that firms can be granted if they invest in digital or environmentally sustainable projects. Firms operating in Gozo, together with start-ups, will also benefit from an additional tax credit of 10 percent, which rises to 20 percent in cases where the investment decreases their carbon footprint. We will also encourage, through a tax incentive, investment in R&D from the private sector.

The Government will also help companies to successfully make the digital and green transitions. It will be setting up new ESG guidelines, with a view to provide technical support for SMEs to conform to them.

Other measures to support business include the aid measures for those who have been badly affected by the rising prices of international transport for instance. In this regard we announced that we will be doubling both the maximum amount of aid as well as the amount of time for which it will be granted to those firms who have been worst hit by rising international transport prices.

Similarly, we extended the scheme through which firms can utilise capital allowances that they were not able to utilise because of the pandemic, while we are doubling the tax credits for those firms who reinvest their earnings.

Ease of doing business is another

“Instead of tightening our expenditure and introducing austerity measures, this administration has announced the most ambitious investment programme ever.” important priority for us. This administration is very much aware of the challenges faced by businesses to access financial services. In this regard, we committed to continue our work with the banking community to make progress on our promise to ensure access to a basic

business account to all, while also establishing a credit review office to help facilitate access to financing.

At the same time, work is ongoing on the centralisation of due diligence processes through the creation of a repository for public sector entities. Access to this repository will be gradually extended to private sector entities, such as notaries and financial services operators.

All of this while continuing to reduce the fiscal deficit and maintaining the public debt ratio below 60 percent, and ensuring our economy remains resilient. In fact, in 2023 our economic growth is projected to be six times that of the rest of the euro area, while our unemployment rate will become the lowest in this zone. This is what makes our economic and fiscal policies sustainable.

Our vision is to continue building a new prosperity where our economy becomes more digital, dynamic, socially inclusive, and environmentally sustainable. This will require substantial changes over the coming years, which will require all stakeholders to act together in synergy.

I am sure our business community will be instrumental in achieving this successfully. n