The Central Bank of Malta seeks to achieve these objectives through the operation of an exchange rate peg. The Bank’s ability to maintain the peg in an environment where capital flows freely across borders, however, depends crucially on financial market perceptions regarding the effectiveness and sustainability of macroeconomic policy, particularly fiscal policy. In this context, the present deficit scenario is not helpful and, if not corrected, could oblige the Bank to raise interest rates. The role of governments How and why have fiscal deficits become a problem? In the first decades after the Second World War, governments came to play a key role in promoting economic growth and social development. In today’s free-market economies, moreover, they provide indispensable support to the activities of the private sector and also play an important role in curbing its excesses. Another function of governments concerns economic stabilisation. They can intervene to stimulate aggregate demand in periods of recession and to restrain it at times when the economy is booming. Under appropriate demand and supply conditions, such intervention can contribute to a more favourable investment environment and, in turn, to growth. Perhaps the most important tool Governments use to pursue these objectives is public expenditure. Taxation and borrowing may be viewed as ways of financing such expenditure, but they also constitute important tools in their own right. Effectiveness of government intervention Government intervention in the economy has important implications not only for competitiveness and growth, but also for the promotion of the social dimension of development.

For the institutions that are socially responsible and work for the benefit of all citizens, the most important indicator for measuring the success in achieving their strategic goals, is the quality of the policies. One of the biggest and toughest tasks of the HRM function, is probably managing the knowledge and building the expertise of intellectual force of the institution, through continuous training and professional development. In order to be effective, organisations must be able to understand that human capital alone will not create value. People have to be motivated and managed by the use of good human resource practices and given the opportunity to develop and use their skills to create valuable goods and services. If the knowledge cannot be embedded in goods and services that are in demand, then this human capital will have no value to the organization. I hope that this workshop will contribute for creating better environment for capacity building in all our countries in the region. Also, it is my strong belief, that this meeting of the coordinators, apart from being useful for exchange of information in the process of prioritizing and creating the future visionary training programmes, will lead to strengthening of the regional cooperation among national authorities. Let me finish my address by quoting Mr. Gary Matthews, Consultant with UK Government’s Investors in People, which I believe reflects the actual economic rationale of training and development of human capital: “People are the only asset that appreciates, through training and development. All other assets depreciate”.