EU urges Malta to strengthen its competitiveness

The European Commission said today that in addition to achieving a sound budgetary position and improving long-term sustainability, Malta faced the challenge of strengthening competitiveness to improve the economy's resilience.

The Commission issued its report after examining the updated stability and convergence programmes of 10 meber states.

In its report on Malta, it said that according to the stability programme, the deficit ratio should broadly stabilise in 2010, at 3.9% of GDP, followed by a drop below 3% in 2011, in line with the Council recommendation of 16 February 2010. It would then stabilise.

The debt ratio is projected to peak at almost 69% this year but the deficit and debt ratios could be higher than planned throughout the programme period.

The Commission said that on the one hand, the programme does not adequately specify the measures needed to achieve the deficit targets, while on the other hand additional consolidation measures could be needed should the economic growth and revenue increases turn out lower than projected or should expenditure slippages materialises.

In addition to achieving a sound budgetary position and improving long-term sustainability, it said that Malta faced the challenge of strengthening competitiveness to improve the economy's resilience. Against this background, the Commission urged Malta to correct the excessive deficit and move to a medium-term sustainable position and improvements to long-term sustainability as well as to the budgetary framework.