Brussels has asked the Maltese authorities for more detailed information on the financial and economic situation before the EU executive can formulate its final recommendation on whether to close the excessive deficit procedure started against the island in 2009.
European Commission sources confirmed yesterday that a technical delegation of experts in Brussels , including officials from Eurostat, the EU’s statistical arm, held various meetings with the Maltese authorities last May and asked for more financial and economic updates to prepare their evaluation.
The Finance Ministry confirmed that the meetings took place , describing them as “normal procedure”.
Last year, Malta managed to stick to the EDP rules imposed in 2009 and cut the deficit to below the three per cent of GDP threshold by the end of 2011.
Malta cut its deficit from more than four per cent in 2008 to 2.7 per cent in 2011 and now has the sixth lowest deficit in the EU.
However, despite this improvement, the Commission has not recommended the Council of Ministers should close the EDP procedures against Malta because, according to the sources, Brussels is still not convinced that the island will manage to keep the pace given the prevailing economic scenario.
According to the latest Public Finances Report in the Economic and Monetary Union (EMU), published by the EU this week, the Commission services’ spring 2012 forecast projected the government deficit at 2.6 per cent of GDP in 2012 and 2.9 per cent of GDP in 2013.
“The deficit was, thus, projected to remain below the three per cent of GDP threshold over the forecast horizon but with a very small margin,” it states.
According to the report , “the Commission has not yet recommended to the Council to abrogate the decision on the existence of an excessive deficit but the situation will be re-evaluated later in the year, subject to complementary information.”
The Commission’s projections, which are always considered to be on the conservative side, are less optimistic than the government’s, which – according to the last Budget – is projecting a deficit of just 2.2 per cent of GDP.
Asked whether the government is still sticking to its 2012 Budget projections, despite a slower economic growth, Finance Minister Tonio Fenech said he was optimistic that Malta would manage to reach this goal by the end of this year.
From the revenue side, all seems to be on track and, although we have to transfer more money to Enemalta to keep the electricity process stable, I am still confident that we will manage to meet our targets once again.