Who's Moody, Lawrence or Joseph? (Part 1)

That Moody's Investors Services downgraded Malta's status from A1 to A2 and pinned the 'negative outlook' badge to our flag is not good news and it deserves to be given the weight.

Why was Malta downgraded? "The main driver underlying Malta's one-notch downgrade to A2 and negative outlook is Moody's view that the global recession of 2008-09 will leave the country with a legacy of slower medium-term economic growth," say Moody's. 

An EU official quoted by Ivan Camilleri of The Times echoes the same point: “Malta depends on the other European markets for its exports, tourism and services, and negative economic news in the rest of the euro area may eventually mean negative news for Malta’s economic growth prospects."

The facts are clear then. The 'main driver' for the downgrade was the global recession, not the local government's handling of it. We might suffer in the future but mainly because our trading partners in Europe will be doing badly.

So does Lawrence Gonzi emerge unscathed from Moody's financial grilling? No he does not. Our debt is higher than it should be and is contributing to the problem, they say.

This is the point at which we leave the realm of Moody's cold financial facts and predictions and enter that of genuine politics. Financial facts are immutable and not open to discussion. Debt politics, by contrast, are a matter of choice.

Increasing or decreasing the country's debt was a response to the global financial crisis. But ultimately it was a political decision. The political leaders of Greece, Ireland, Spain and other countries continued to live in a bubble of financial incontinence and took decisions - or rather failed to take them - which rammed their countries into a wall. Others did not and are now faring better. Where do we place on this scale?

As I understand it, Lawrence Gonzi's stewardship through the crisis was based on a simple three pointed attack - do not shelter the economy artificially from global blows, give protection only to families and businesses who need it most and pin all your hopes on economic growth.

Did it work? At this point we re-enter the realm of facts. The debt grew moderately, some businesses and families suffered but are slowly pulling through and - most cruically - the country's economic growth is now the fastest in the Eurozone (Eurostat).

At the same time exports increased by 50%, the unemployment rate was kept at a relatively low 6.3% and tourism - our economic bedrock - is hit record levels. And it was all done without resorting to the austerity measures taken by other countries. Eduction and health remained free and social services and pensions were not cut back. Again, these are facts, not opinions.

Now what is Joseph Muscat's and the PL's take on this matter, a matter which can make or break each and everyone of us? I will get to it in Part 2.