Updated at 10.45am with government statement 

The head of the finance ministry has stepped down after 16 years in charge of the government’s purse strings. 

Top civil servant at the Ministry for the Economy Paul Zahra will be replacing him, the government confirmed on Monday.

Sources told Times of Malta that Alfred Camilleri, who since 2006 has been the top civil servant at the finance ministry, informed the government that he would stepping down. He reached retirement age a few years ago.

It is understood that he informed the government of his decision almost immediately after the Financial Action Task Force last week voted to take Malta off its grey list. 

Sources said Camilleri had already signalled his intention to leave public service earlier this year but remained in office to oversee a task force charged with getting Malta off the list. 

Government efforts to retain Camilleri in either the same post or a different advisory role have proved unsuccessful, and he was described as “adamant” on stepping down.

Camilleri has a reputation as the man with the tightest grip on public spending, with various government sources describing him as “the person to convince” when trying to secure financial backing for an initiative or project. 

He was one of the few permanent secretaries not to have faced the chop when Joseph Muscat became prime minister in March 2013.

His critics, however, say that Camilleri signed off on major deals during the Muscat administration that have been linked to alleged corruption and misuse of public funds. 

Government sources said Camilleri has become conspicuous by his absence in recent weeks.

Insiders said he has stopped attending several meetings and taken a noticeable back seat in those he does attend.

Camilleri had previously headed the National Statistics Office before joining the finance ministry.

Meanwhile, it is understood that the replacement hand-picked by Finance Minister Clyde Caruana  - Zahra - was originally given the thumbs down by the Office of the Prime Minister.

Zahra joined the public service in the 1980s, filling various economic advisory roles within the Office of the Prime Minister.

Until recently, he was the top civil servant at the Ministry for the Economy, European Funds and Lands (European Funds), headed by Silvio Schembri.

Top civil servants have described Zahra as the “obvious choice” to take over the finance ministry. 

Government contacts said the decision to appoint Zahra signalled Caruana’s intention to lock horns with the thorny matter of redrafting the island’s tax regime. 

This is understood to be viewed by advisers in the ministry as one of the greatest challenges faced by the finance team in recent years. 

Caruana last month announced that Malta’s tax system will be scrapped and a new one installed in its place by 2025.

The government said on Monday that Ronald Mizzi, permanent secretary within the Economy Ministry, will now also be responsible for European funds.

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