Malta 'is still eligible' to Objective 1 funding... but

Current data available indicates that for the purposes of the next EU budget period (2007 - 2013), Malta will still be considered as eligible for the highest degree of financial support from the regional funds.

However, the available funds would be reduced gradually over the same budget period as a result of Malta's economic progress.

This was confirmed to The Times by Maria Mailand, a spokesman for Regional Policy Commissioner Jacques Barrot.

Doubts about the level of financial support that Malta would be entitled to emerged earlier last week after Mr Barrot told the regional development policy committee of the European Parliament that the situation of Malta and Slovenia in keeping their Objective 1 status is still unclear and will have to be decided later.

But answering questions by The Times, Mr Barrot's spokesman explained that "the eligibility of Malta to the first objective (the present so-called Objective 1) will be determined by its Gross Domestic Product figures available at the moment of the European Council decision".

It is still not known when will the EU Council decide on the Commission's proposals although this is expected to happen next year.

Mr Barrot's spokesman said that if the Council makes its decision next year then the data taken into consideration will be that covering the period 2000-2002. She added that "on the basis of GDP data available at the moment (for the period 1999-2001), Malta would be eligible to a new component of the regional policy called statistical phasing out". This means that although Malta would qualify for the "Convergence Objective", which under the present rules is called "Objective 1", funds will be reduced gradually over the seven-year budget period.

Last July, the European Commission published a new set of proposals regarding the structural funds aiming at further simplifying the present mechanism and the instruments used in funding.

The issue is about the classification that Malta should be allocated under the regional development policy of the EU. Prior to membership and for the current budget period, which ends in 2006, Malta is considered as an Objective 1 member state. Which means that Malta is eligible for the highest degree of EU funding.

The classification of countries eligible for funding is done according to an economic instrument called the Purchasing Power Parities (PPP) issued by Eurostat, the statistics office of the EU. Only countries which are under the 75 level of the index are considered eligible to Objective 1 funding.

Due to the fact that many poor countries joined the EU and so the average GDP of the EU fell substantially, Malta is close to lose its Objective 1 status. In fact, according to the latest statistics available, Malta has an index of 73 points, only two index points away from the threshold. These statistics still have to be revised before the allocations of the next EU budget.

When he addressed the European Parliament's committee, Mr Barrot noted that Malta and Cyprus are island-member states, arguing that due to this new reality for the EU, Malta would benefit from an increase in the maximum rate of contribution from the Structural Funds (+ five percentage points) where it would find itself eligible to the new objective on "regional competitiveness and employment". This does not mean additional resources but would allow Malta to benefit from a more limited national contribution.