The cost-of-living adjustment will soon be supplemented by a new initiative after Finance Minister Clyde Caruana revealed that the government will be unveiling a new mechanism over the next budget.
COLA is a mechanism used to reflect the increase in cost to maintain a certain standard of living. This is calculated based on the prices of a wide variety of goods and their inflation.
The adjustment is usually announced during the budget speech.
However, Caruana, speaking at a pre-budget meeting, said government compensation for inflation should be targeted at those most in need.
“It can’t be an adjustment that affects everyone as some do much better than others,” he said, adding that the past year has shown that COLA no longer reflects modern realities.
The announcement follows a Central Bank policy note published last month that suggested introducing a second index – in addition to COLA – to track inflation experienced by low-income households after noting that they experienced significant rates. higher inflation than the average household.
Caruana was keen on the details of the mechanism but said it would involve discussions with key stakeholders on the new formula.
He said that ultimately the mechanism will benefit those who are most vulnerable in the country.
“If we don’t, no one will,” Caruana said.
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