Reflections for Malta's budget for 2021.
September 25, 2020
This year is no normal year. The COVID-19 pandemic has brought a global recession of significant proportions with large contractions in GDP happening despite governments pumping in significant resources into the affected economies.
It is against this backdrop that this year’s budget is happening. In Malta, an economy still heavily dependent on tourism, the contraction in GDP was significant although a number of forecasts project a healthy recovery given the exceptional circumstances. Over the past few months, Government has introduced several measures aimed at stimulating the short-run drop in activity. These timely, temporary and targeted measures have supported businesses; however, the economy and its economic agents still need to adapt to a new reality of co-living with the pandemic and the recovery will not be an automatic process, but more of a gradual process.
Seed launches its pre-budget recommendations with a two-pronged approach. The first set of recommendations focuses on a short-term stimulus package to continue supporting real economic activity with the main measure being the gradual reduction in corporate tax for local businesses. Second set of proposals are anchored around a long-term vision for the island.