Libya has agreed to settle all outstanding debts with Maltese companies and pledged to try and solve the visa problem once and for all following a "successful" visit of the Foreign Affairs Committee.

Speaking at a news conference, committee chairman Jason Azzopardi, MP, expressed optimism that the visit had paved the way for healthier relations between the two countries.

The visa problem has been a bit of a thorn in relations between the two countries, but in the last weeks an improvement has been noticed in the issue of visas.

The government has also set out to improve relations with Malta's powerful neighbour to the south, and both Prime Minister Lawrence Gonzi and Foreign Minister Michael Frendo have visited Tripoli for talks.

Dr Azzopardi said yesterday Libyan Prime Minister Shoukri Ghanem informed the Maltese delegation that Libya intended to settle debts with Maltese companies by 2005. Libya owes Maltese companies a total of Lm2 million, including Lm196,000 to the Health Department.

Dr Azzopardi said that in principle Libya had agreed to sort out the problem of visas. The two sides agreed to hold a technical meeting in mid-December to hammer out an agreement.

A draft agreement has already been drawn up which would make it possible for the issuing of multiple-entry visas for a period not longer than six months. The agreement also stipulates that visas would be issued within a maximum of five days - possibly resolving the headaches of several businessmen.

The problem of illegal immigration was also discussed, though it appears that little headway was made in this respect. However, the Maltese representatives are keeping their fingers crossed that a high-level technical meeting between the EU and Libya on Saturday could break the deadlock.

Discussions also probed how the two countries could work together to exploit tourism in the region, especially in the cruise lining business. Libya is projecting an explosion in inbound tourism from 200,000 to five million within five years.

The Libyan congress agreed that exchange visits with Malta would take place every six months, and that the five Maltese MEPs would travel to Tripoli shortly.

The Parliamentary Affairs Committee suggested that the Libyan school in Ta' Giorni could double up as a joint training centre for North African countries.

Dr Azzopardi said the delegation made it amply clear to their Libyan counterparts that Malta as an EU member did not in any way signal a detachment of the special relations between the two countries.

In fact, Dr Azzopardi explained, the Libyans had several misconceptions about Malta's new role within the EU.

One such case, Labour MP José Herrera said, was the Libyan belief that there would be a harmonisation of taxes within the EU - something that was thwarting potential investment to Malta.

Labour MP Leo Brincat said, however, that the Libyan Prime Minister made it clear to the Maltese delegation that his country intended to tackle reforms and inefficiency at once.

Nationalist MP Mario de Marco said Malta had great potential to act as a go-between for international investment in Libya.

"Malta has offered constant and consistent help to Libya and this fact is well acknowledged by our neighbours," Dr de Marco said.

The other MPs in the Maltese delegation were Clyde Puli, George Vella and Michael Asciak.

Foreign Affairs Minister Michael Frendo, who has himself had talks with the Libyan authorities, said later the visas issue had been under constant discussion over the past few months and in the last month a marked improvement in the way visas were issued had been noticed. Maltese businessmen were now filling in a form issued by the Libyan embassy instead of needing a letter of invitation, and a visa was then being issued within a few days.

Dr Frendo said: "The committee's statement confirms that this procedure is there to stay."

He said the meeting scheduled for December was part of regular meetings of the technical committee which was set up following his visit to Libya and his meeting with the Libyan foreign minister. Various sessions had already taken place.

Dr Frendo said that following Prime Minster Lawrence Gonzi's visit to Libya, he had sent a note verbal to the Libyans proposing a six-month multiple-entry visa for business people from both countries.

"This issue is still under discussion and prior to the visit of the EU foreign affairs committee to Libya on my request, I gave a confidential briefing to all the members of the committee on outstanding issues and on this proposal.

"I have to express my satisfaction that this confidential briefing had the desired result and that there now seems to be, according to the committee's statement, a consensus in this direction at the parliamentary level."