The latest public finance statistics published by Eurostat show that in the third quarter of 2018, Malta recorded the highest fiscal surplus (3.8 per cent, and the largest decrease in its debt-to-GDP ratio (-3.1 p.p.) among the 28 EU Member States.
According to the National Statistics Office, the government recorded a surplus of €128 million in the third quarter of 2018, as total revenue increased to €1,235 million, while total expenditure amounted to €1,107 million.
The increase in revenue was boosted by significant growth in revenue from both direct and indirect taxes reflecting the record increases in employment and the robust growth in private consumption.
On the expenditure side, the increases mainly reflected the expenditures on the income tax relief budget measure, on education and social benefits, as well as on wages and salaries reflecting the enhanced collective agreements of public sector employees. Additional expenditure was allocated to cover the Malta’s Own Resources transfers to the EU and EU funds transfers to entities outside government.
As a result of these developments, the general government debt for the third quarter of last year decreased both in absolute terms and in per cent of GDP: the debt-to-GDP ratio fell to 45.9 per cent, reflecting a €326 million decrease in national debt. This is well below the 60 per cent benchmark set by the EU.
Business sentiment slightly down in December
The Business Conditions Index eased slightly in December over the previous month, as economic sentiment fell as lower confidence within the industry and retail sectors as well as among consumers offset higher confidence in construction and services.
This was one of the conclusions of the Central Bank of Malta’s Economic Update based on information available up to January 14, 2019.
In November, tourism activity increased at a slower pace in annual terms. Industrial production rose, while retail trade fell on a year earlier.
Conditions in the labour market remained favourable as the number of registered unemployed remained low from a historical perspective and the unemployment rate declined further on year ago levels.
Maltese residents’ deposits grew by 4.6 per cent in the year to November, while credit to residents grew by 3.5 per cent.
Meanwhile, the cash-based Consolidated Fund recorded a deficit in November.
European Commission fines Mastercard €570 million
The European Commission has fined the card scheme Mastercard €570, 566 000 for limiting the possibility for merchants to benefit from better conditions offered by banks established elsewhere in the Single Market, in breach of EU antitrust rules.
Under the MasterCard scheme, banks offer card payments-related services under common card brands, Mastercard and Maestro. Mastercard acts as a platform through which issuing banks provide cardholders with payment cards, ensure the completion of the card payment transaction and transfer funds to the retailer’s bank.
When a consumer uses a debit or credit card in a shop or online, the bank of the retailer (the ‘acquiring bank’) pays a fee called an ‘interchange fee’ to the cardholder’s bank (the ‘issuing bank’). The acquiring bank passes this fee on to the retailer who includes it, like any other cost, in the final prices for all consumers, even those who do not use cards.
Mastercard’s rules obliged acquiring banks to apply the interchange fees of the country where the retailer was located. Prior to December 9, 2015, when the Interchange Fee Regulation introduced caps, interchange fees varied considerably from one country to another in the EEA. As a result, retailers in high-interchange fee countries could not benefit from lower interchange fees offered by an acquiring bank located in another Member State.
A Commission investigation found that because of Mastercard's cross-border acquiring rules retailers paid more in bank services to receive card payments than if they had been free to shop around for lower-priced services.
On this basis, the Commission concluded that Mastercard's rules prevented retailers from benefitting from lower fees and restricted competition between banks cross border, in breach of EU antitrust rules. The infringement ended when Mastercard amended its rules in view of the entry into force of the Interchange Fee Regulation.
As a result, the Commission decided to impose a fine on Mastercard.