The Moody blues

Edward Zammit Lewis wants you to know everything’s orrajt and you’ve still got money in your pocket.

The government paid for another rating’s agency report, and they’re busy highlighting the bits that told them what they wanted to hear.

“Hard work pays off!” he said. “As Moody’s put it, our institutions are ‘balanced by a very strong governance profile’”.

Of course, no one’s quite sure what a “very strong governance profile” is — especially when taken out of context. But I’m sure the legal system is in safe hands. Look at what a great job Zammit Lewis did with Air Malta.

Never one to miss an opportunity to spout vapid platitudes, Robert Abela weighed in, too, adding, “Our reforms are making a difference.”

No one seemed to know which ‘reforms’ he’s referring to, but that doesn’t matter as long as you toss in a few carefully selected quotes. Just be thankful he didn’t dredge up another wave metaphor.

Psst…. Robert. You missed a bit.

Yes, I know you guys commission these reports to drip out ‘positive’ press releases every time there’s bad news. But details still matter. Due diligence (<sigh> …look it up…) behooves you to share what the rest of the Moody’s report said. After all, taxpayers funded it.

Here’s the bit that’s worrying the rest of us:

“Although concerns remain over the control of corruption in Malta and the small size of the jurisdiction can be a constraint on institutional capacity, on the whole, the country benefits from a strong institutional environment supported by its EU and euro area membership.”

Translation: Malta is answerable to EU laws and institutions, at least on paper. Being an EU Member State and a member of the Eurozone should prevent the country’s economy from going too far down the tubes.

As pointed out on Twitter, the EU’s stability and economic performance ratings cause Malta’s to skew upwards, simply by being a Member State.

It’s a bit like the way a larger object exerts a strong gravitational pull, bending passing light beams towards it.

The risk is that otherwise @MoodysInvSvc are reporting that institutional risks are one of the material risks keeping Malta's rating down (EU is aaa while Malta, which benefits from an EU "uplift", is rated baa for its institutions) and press are saying the opposite. pic.twitter.com/AnqzuK3rU1

— BugM (@bugdavem) February 10, 2021

Of course, even a rating’s agency paid by your government had enough integrity to point out the obvious.

Moody’s expects the government’s reform efforts — you know, the ones that only exist on paper — to continue. And it expects these highly anticipated improvements to address the greatest risks to Malta’s financial sector: “money laundering and the financing of terrorism”.

Moody’s has a lot more confidence in Abela’s reforms than the Venice Commission does.

Unfortunately, growth forecasts are down now, too.

Back in April 2020, Moody’s predicted Malta’s economy would decline by 3.8%. Now they think last year’s decline was closer to 7.8%.

Sure, the pandemic had a lot to do with it. But the pandemic has a lot to do with Malta’s recovery, too.

You see, Moody’s has pinned its hopes on tourism.

In order for this economic decline to level off, Moody’s says tourist arrivals must be substantially higher in the second half of this year than they were during last year’s peak season.

Place your bets on that one if you dare. You’ll be rolling the dice not just on Malta’s domestic vaccination rate, but on the willingness of Europeans to travel this year — and to choose Malta over other places.

Air Malta isn’t counting on it. They’re busy cutting unprofitable routes. Yes, it’s still bleeding money like a man with a severed artery, but it hopes to bleed a little less by cutting off everything except the UK, France, Italy and Germany

The national airline isn’t alone in its pessimism. Malta International Airport announced this week that it lost 70% of its routes in just one year. Joseph Muscat can’t even slip away to Dubai now that Emirates pulled the plug.

Thankfully the gaming sector is doing okay. Better hope Moneyval doesn’t mess that up.

Speaking of the looming evaluation of the country’s money laundering compliance, I wonder how Moneyval feels about a country under siege from organised crime, corrupt politicians, and an increasingly nervous EU appointing a 19-year-old without a degree or any relevant experience in the sector — and how could he have? — as a governor at FinanceMalta?

Carlos Zarb’s sole qualification? He’s a member of the Labour Party youth wing’s executive. It doesn’t exactly ooze confidence, does it?

But don’t worry, other key financial institutions are well taken care of.

John Mamo has been reappointed chair of the Malta Financial Services Authority for another three years. Sure, his previous tenure was tainted by an endless litany of scandals, most of which involved looking away when he should have been supervising and sanctioning the likes of Pilatus Bank.

He’s also unrepentant that his personal appointee, disgraced former CEO Joseph Cuschieri, was forced out after abusing his power and public funds. Mamo wants you to know he has “no regrets and no apologies” — and no accountability, either.

The Governor of the Central Bank is a self-serving yes man who manoeuvred himself into the job — with a hefty pay raise — when he was finally dislodged from the Finance Ministry, where he spent years doing nothing to protect the public purse. Edward Scicula looked away from the Vitals Global Healthcare deal and Electrogas so hard it must have left him with a terrible Kink in his neck.

The new Economy Minister promoted to the role after turning Malta into ‘Blockchain Island’. Of course, 70% of the firms that said they wanted to be part of it didn’t apply. As of November, the MFSA hasn’t issued a single cryptocurrency licence. I guess he could always sell citizenship to robots. That should raise some badly needed cash.

You can be assured of a prosperous future with the financial sector in such good hands.

Unfortunately, there’s one glaring problem. It’s the same problem Zammit Lewis and Abela dodged with their selective quotes.

Every floor in the house has been soiled, but rather than invest in a shovel, the government is buying more rugs to pull over it.

Everyone knows who’s responsible for causing this stench. It’s just that there’s no willingness to charge and prosecute any of them for their crimes.

Look past their quotes and read between the lines.

Even taxpayer funded analysts can see accountability is the only thing that will rescue the economy now.