Malta still most generous among EU members

The amount of government subsidies pumped into the Maltese economy is still considered by the European Commission to be very high.

According to the latest state aid scoreboard, published yesterday in Brussels, Malta is dishing out the largest amount of financial assistance among the 25 member states of the EU, at least when compared to its Gross Domestic Product (GDP). The report also shows that last year, Malta increased government subsidies over the previous year, in contrast to what happened in the EU.

The 2005 scoreboard shows that last year, €142 million (Lm62 million) were given in grants or tax exemptions. This represents an increase of €8 million (Lm 3.5 million) over the previous year. As a percentage of GDP, Malta's state aid in 2005 amounted to 3.16 per cent, well above the EU 25 average of 0.59 per cent. In 2004, the amount of subsidies in the Maltese economy stood at 3.10 per cent, or €134 million (Lm 58 million).

Malta Shipyards remains by far the biggest beneficiary of the government's subsidies, so much so that the manufacturing sector, basically the shipyards, took almost 81 per cent of all the subsidies from the state's coffers. Agriculture subsidies last year amounted to 15 per cent, another three per cent went to the transport sector and one per cent of the subsidies were granted to the services sector which includes tourism, culture and the media.

In its report, the Commission said that although Malta's share of state subsidies remains high, this should be of a temporary nature as most of the aid measures in question are either being phased out or are limited to transitional measures agreed before the island's accession to the EU. In fact by 2008, Malta's state aid should go down dramatically because according to the Accession Treaty, all the subsidies being given to the shipyards will have to stop.

According to the European Commission report, the total amount of state aid granted in 2005 by the 25 member states was estimated at €64 billion (Lm28 billion), a slight increase over 2004.

In absolute terms, Germany granted the highest amount in state aid (320 billion), followed by France (€10 billion), Italy (€6 billion), the UK (€5 billion) and Spain (€4 billion). In relative terms, following Malta at 3.16 per cent of GDP, stand Hungary (1.83 per cent), Finland (1.75 per cent) and Cyprus (1.08 per cent).