Budget 2021: What’s in it for the Financial Services – Mark Bamber, Technical Specialist, MFSA

The Hon Minister for Finance and Financial Services, Edward Scicluna, in his 2021 Budget speech set out government’s vision based on good governance, sustainability founded on a green and digital economy, continuing investment in infrastructure and a comprehensive package of social services.

Operators in the financial services sector doubtlessly prize all efforts to enhance Malta’s status as a leading respected European jurisdiction of high repute. The continuing drive towards the reinforcement of Malta’s markets and its international reputation, the setting up of the Financial Organised Crime Agency, the strengthening of our institutions, all lead towards refining our jurisdictional strength, maturing our regulatory infrastructure, and enhancing our enforcement operations.

Financial sector operators are entrepreneurial, and the budget speech specifies a continuing drive to promote policies in the Regtech, Blockchain and FinTech spaces. Coupled with the recent setting up of the consultative council for financial services; initiatives to develop the depth, access and efficiency of the sector; as well as initiatives to strengthen actions against financial crime and money laundering, all drive growth into our markets and new opportunities for operators.

In the medium term, the 2021 Budget’s additional measure to limit the use of cash in the economy and investments in the upgrading of the Customs department will leave positive results in the fight against money laundering and create a more competitive and regulated marketplace.

The injection of €100 million into the local economy, doubtlessly driving economic activity and increasing liquidity in the market, combined with the stimuli to the labour market, the capital market, the property market and the retirement pensions market, will combat the depleting impact of the prevailing COVID-19 pandemic, creating a more active local market.

As employers, operators in the industry will also benefit from the initiatives to secure a prioritised availability of an eventual vaccine, and to implement world-class health protocols in the intervening period. Malta’s fastest route to normality is to safeguard lives and to protect the health of our citizens. In the short term, interventions to support incomes, lighten personal tax burden, and incentivise safe consumption will be beneficial to the sector’s workforce, while in the medium to longer term, investments in education and training will doubtlessly have a beneficial impact on the supply and quality of talent on the market in future years.

The Budget Falls Short of Bolstering the National Economic Vision - Marisa Xuereb, Deputy President, Malta Chamber of Commerce

In our initial reaction, we termed the financial plans for 2021 as rich in social measures, yet vague on economic recovery. For the Chamber it was immediately apparent that the Budget failed to be bold enough to make solid financial commitments to support the Government’s vision for the upcoming years, and to paint a clear picture of how it plans to reshape an investment-conducive environment for businesses to grow.

The Malta Chamber led a vast consultation process with all its members as well as technical experts on several subjects in the days leading up to the budget and was forthcoming with a series of proposals and recommendations to Government. These were driven by the need for this 2021 Budget to be a formative exercise that would detail the first steps towards the national economic vision for the next decade.

The Malta Chamber urged Government to address the difficulties and uncertainties currently being experienced by businesses due to the COVID-19 pandemic. As a Chamber, we also argued in favour of strategic investment in long-reaching instruments that will drive a more sustainable economy that befits a resilient Maltese society into the future. While generously addressing its social obligations, the Budget fell short of detailing the first steps towards attaining these long-term objectives. Our country needs to work hard to recover for lost growth during the pandemic, support the re-invention of traditional sectors which have been prejudiced, and re-invest in new sectors to shape the country’s economic tomorrow. This economic re-engineering that is expected to lift our national wellbeing towards what is outlined in our national economic vision needs to be kickstarted with urgency, as we are losing precious time. On behalf of Malta’s business community, the Malta Chamber shall continue to follow developments closely and seek clarity on these matters that will drive and grow the country’s wealth and associated wellbeing.

The Malta Chamber cannot but flag the fact that the budget does not address the significant impact that COVID-19 is having on the relationship between revenue and operating costs for businesses, particularly those whose survival is key to the future economic development of the country. The Budget did not introduce any new or more effective measures to support businesses that are struggling on this front. It reflected Government’s optimism that the economy will recover in the short term, an optimism that is not shared by businesses at large. The Chamber hopes that should the Covid-19 crisis deepen or extend beyond the next six months, further support beyond that included in this budget will be forthcoming.

The Malta Chamber strongly believes that economic stakeholders and decision-makers must take advantage of the disruption that has been brought about in the past months and seek new opportunities derived from it intelligently. The country must emerge out of this fog more resilient and energised today, for a more competitive Malta tomorrow.