EU commends Malta's euro preparations

A new report by the European Commission shows Malta is doing a good job in preparing for its possible currency switch from the lira to the euro in less than 13 months' time.

At the same time, an opinion survey issued with the report shows that the Maltese have increased their support of the euro by six percentage points over the last six months.

However, together with Cyprus, Malta is still considered to be a sceptical country with only 31 per cent stating they are expecting positive consequences from the adoption of the euro.

The positive assessment on Malta's preparedness is the second in a week. European Monetary Affairs Commissioner Joachim Almunia last Monday hailed Malta's progress towards achieving the euro-entry economic criteria. A Commission official responsible for drafting yesterday's report told The Times that Malta's technical preparations are the most advanced when compared to the other new member states, including Cyprus, which is planning to adopt the euro together with Malta.

This was also later confirmed by the EU spokesman for economic affairs, Amelia Torres, who said "Malta's preparations appear to be the most comprehensive and detailed and are more advanced than Cyprus".

The report, the fourth in two years, assesses the state of practical preparations in the countries that have to adopt the euro (all new member states) with an emphasis on the adoption of a changeover plan, details on the duration of the period during which both the national money and the euro cash are legal tender and the preparation of starter kits to accustom consumers to the new currency.

This assessment is completely separate from the convergence reports, which assess whether countries comply with the economic entry criteria including limits of deficit and inflation levels.

The Commission said the Maltese National Changeover Euro Committee (NECC) is preparing Malta adequately and the only sectors that require further specification are the timing of frontloading and sub-frontloading of euro cash, an accelerated conversion of Automatic Teller Machines to make sure cash is available on e-day and more details on the starter kits and the dehording campaign.

Contacted by the Times, Alan Camilleri, NECC's executive director, said the European Commission report is very positive with regard to both the technical preparations and the information campaign launched by the committee.

"The Commission's report has recognised that Malta's national changeover plan is detailed and comprehensive. The report has also stated there seems to be no particular indications that certain sectors of the Maltese economy would not be able to cope with the challenges of the 'big bang' scenario, in which case the euro will be introduced at once on January 1, 2008."

In its report, the Commission highlights a particular problem, as it seems that Maltese citizens tend to keep a lot more cash at home than the normal European average. According to the Commission, Maltese citizens hold an average of €2,789 per capita, more than twice the EU average.

The Commission said particular attention to this must be given so that all the cash is converted into euros. It suggests "special arrangements", although it does not specify what should be done.

Commission sources told The Times this situation could also be a consequence of undeclared money in the economy.

"If that is the case, the government may have to decide to take steps to ensure this money is back into the legal economy," the sources commented.

Public opinion is also given importance in the report.

According to a Eurobarometer survey, carried out in September, Malta's support for the euro rose to 48 per cent from 42 per cent last April. At the same time 62 per cent of Maltese respondents said they are not informed enough.

According to NECC's Mr Camilleri, the survey results show the Maltese are warming up to the idea of the introduction of the euro. He attributed the positive shift in public opinion to the fact that there was now more information available on the euro.

"It is evident that the information campaign launched by the NECC is being well received. From previous surveys it transpired that a significant proportion of the population was against the euro simply due to lack of information about the subject. There were also significant misconceptions attributed to the euro which the information campaign is addressing.

"The information campaign will continue to intensify over the coming months in order to inform the public about the euro and update the country on the developments related to the practical and technical preparations on the introduction of the euro.

"It is also encouraging that the Commission's report has recognised the significant efforts being carried out by the NECC to implement a thorough intensive communication and information campaign."

Another convergence report on the economic preparedness of Malta is due next month.