Let’s Turn the Page, Where to?

Most of us will eagerly be turning the page on 2020 and looking forward to 2021. In fact, 2021 is expected to be better, not a difficult feat to achieve, with most of the aspirations hanging on the vaccine.

While we will all gladly swap any given year with 2020, 2021 is not presenting us with a clear trajectory.

2021 will see the slow return and gradual gearing up of the normal economy, something that will be consolidated between 2022/2023. 2021 will in fact still retain a number of unknowns – when will we be clear of the virus? How many tourists will Malta be attracting? What is the size of our economy?

What we want to avoid is going into 2021, such an important year for recovery, with an attitude of nonchalance, lowering our guard on preparation just because 2021 will be a better year than 2020.

In reality we must all work twice and even triple as hard to make 2021 a year of recovery. The reality is also that our contracted economy will not have space to accommodate the number of economic operators we had prior to Covid and certain sectors will take long to regain viability.

We must go into 2021 better prepared to turn the losses into profitability, in a much shorter timeframe. In a state of great fragility, following 2020, businesses do not afford wasting resources, they do not afford waiting around for clients that will not return in time to save their business.

Malta’s economy will have to restructure, and this is something we have been hearing for months about, yet the direction of restructuring is not known. This is something Malta must rectify in the immediate because we must shorten waiting time, we must redirect resources and funds from unsecure and questionable activity into the new lifelines.

Many businesses are at the moment evaluating their position and some are finding taking diversification decisions difficult since there is no clear guidance. Businesses know that due to Covid some doors will remain closed for now, but which doors Malta will seek to open, in terms of alternative economic pillars, is still unknown.

Such visibility and clarity is also essential from a banking perspective. Given the facilities made available thanks to the MDB, increasing the debt levels has so far been quite accessible, going into further debt however, either to sustain current business activities or to invest into re-structuring and diversification, will be a challenge.

Going into further debt is risky, yet investment and business redirection will be necessary for most businesses. SMEs should be supported through aggressive grants that will cover a significant part of the investments, not just any investments, but investments that will support Malta in its economic restructuring and redirectioning.

Economic recovery is a collective effort and responsibility. Our country does not afford stakeholders working independently, stakeholders must work together and in sync.

The Recovery Plan for Europe, the EU’s long-term budget, coupled with the NextGenerationEU initiative, will be the largest stimulus package ever financed through the EU budget. Malta needs to take the opportunities offered by greater flexibility in State Aid regulations to aggressively support businesses make the necessary investments, by which, they will be able to enter into the economic sectors that will re-ignite Malta’s economy, improve their business models into more sustainable ones and advance on the digital fronts.