As Eurosceptics bask in the success their parties have achieved in the European Parliament elections, new facts and figures from the European Commission show that the measures taken in the countries hit by the financial crisis and recession have paid off.
Unfortunately, many in Malta still do not seem to take an active interest in what happens in the European Union as a whole. Possibly influenced by the ‘them-and-us’ mentality unwisely perpetrated by some politicians, they have not yet quite realised perhaps that the island is an integral part of the Union.
So, even though Malta is doing well and, according to the European Commission, the economic outlook is better than the euro-area average, it is also good to learn that growth in the rest of the Union has returned.
Only Cyprus and Croatia are expected to see their economies shrink this year, and, by next year, all EU economies are expected to be growing again.
The aggregate budget deficit of EU countries is also expected to fall below the three per cent of GDP limit this year. All this is of direct interest to Malta for, if the island had managed to do well in the worst of times, it should do better now that the situation is improving, though it looks as if it has to pull up its socks a bit as it is running the risk of losing its competitive edge. There are other weaknesses as well.
In fact, the country is not doing well enough yet for the Commission to end the excessive deficit procedure against Malta. While the deficit has been brought down to below the three per cent threshold, at 73 per cent of the gross domestic product, debt is still far higher than the prescribed 60 per cent threshold.
In its latest country-specific recommendations, the Commission is making five recommendations for Malta: correct the excessive deficit in a sustainable manner; step up ongoing pension reform by significantly accelerating the planned increase in the statutory retirement age; continue policy efforts to address the labour market relevance of education and training and improve basic skills attainment; diversify the energy mix; and continue efforts to increase the efficiency and reduce the length of public procurement procedures.
Linked to the second recommendation is also one calling for a comprehensive reform of the public health system to ensure that it delivers a cost-effective and sustainable use of available resources, such as strengthening primary care.
It is not the first time the Commission has called on Malta to raise the retirement age but both the former Nationalist government and the current Labour administration have stood their ground on this, arguing the island is already raising, in a gradual manner, the retirement age from 60/61 to 65.
The arrangements for the introduction of the third pillar pension are taking far too long to be introduced.
The deficit has been bought down to below three per cent but the Commission feels that the risks to the budgetary targets are tilted to the downside as “the structural revenue increase planned over the programme period is not fully underpinned by measures and expenditure overruns could require higher than budgeted disbursements”.
Apparently, Brussels is not yet convinced the island can maintain the progress made so far. It is up to the government to prove the Commission wrong but this can only be done through quick action to address a string of existing shortcomings and weaknesses.
Independent journalism costs money. Support Times of Malta for the price of a coffee.Support Us