Brussels says Malta's deficit to grow to 3.8% this year
Hours before the announcement of the 2009 budget, Brussels is forecasting that Malta’s structural deficit will increase to 3.8% this year, 2 percentage points more than projected by the European Commission earlier this year.
According to the Autumn Economic Forecasts, issued by the European Commission in Brussels this morning, Malta’s economy will also slow down next year although it is not expected to go into a recession, as many of the other Euro area member states are expected to do.
While the average growth in the Euro area next year will be down to just 0.1% of GDP, with many member states even registering negative growths, Malta’s economy is still expected to expand by 2%.
GDP growth in 2008 is expected to reach 2.4%.
Brussels said that due to lower economic growth, it is forecasting that in 2009 Malta will also experience a slight increase in unemployment, from 5.9%in 2008 to 6.4% in 2009 and an insignificant increase in government debt from 63.1% of GDP to 63.2.
The Commission underlined that the current privatisation of Malta Shipyards, in particular the early retirement scheme offered to dockyard workers will be costing the Maltese economy 1 percent of GDP.
‘The deterioration (in structural deficit) results primarily from the expenditure side. There was a higher increase in the wage bill on account of additional recruitment and higher wages in particular in the health sector, higher subsidies given the decision to freeze water and electricity prices and the sharp rise in the oil price and early retirement schemes in preparation for the privatisation of the Malta Shipyards with an estimated one-off cost of 1 percent of GDP,’ the Commission said.
However, the Commission said that on a pre-budget basis and with the one-off cost of the early retirement schemes vanishing, the deficit is projected to decline to 2.7%of GDP in 2009 and down to 2.5% in 2010.
Commenting on the overall forecasts in the euro area, EU Monetary Affairs Commissioner Joachim Almunia described 2009 ‘as a year with a dark horizon.’
‘Recession is a real risk for all the euro area and we have to pull up our socks to make sure that we recover as soon as possible from this downward economic trend,’ he told journalists in Brussels.
Popular Stories
Update 3: Woman found dead in car,...
Updated: Woman dies in car crash
Part of Dwejra 'Azure window' collapses
The end of the bar that ‘never closed’
Bundy does not know whether to...
Updated - Jason Micallef demands...
This WAS the night - Kurt makes it...
Carm Mifsud Bonnici resigns after...
Petrol price up 6c
In Discussion
32 Comments
Post comment
Please sign in or create your Account to post comments.
deb bugeja
Nov 5th 2008, 17:47
What irritates me is that whatever government there is, they always let government companies like dockyard and enemalta to abuse from the citizen's money. the kind of management is always lead to make deficit thus working with no profit while some people make good money for their own personal income. When the country cannot take any more loss they always turn on other people who have always paid their taxes accordingly.
We have to pay excessive taxes to make well for the dockyards workers who took the government schemes and put them into their own pockets.
Then
V.Micallef
Nov 4th 2008, 17:24
@Francesca Abela
We, moaners and groaners? I should think the Treasury is moaning and groaning much louder.The reason why? Just have a look at this, if you have the guts: When the PN took over it found a SURPLUS of 500 million. Now we have 3500 Million DEBT. Is that shocking enough or do you want more awful details? In case you, have a look at Vince Farrugia, Edward Scicluna, Lino and other politically uncommitted gurus have been, and are still, writing and stating in the media.
Zammit S
Nov 4th 2008, 16:53
The same story is repeating itself over and over again. That's why the country's finances never improve because in the last two budgets, the governments tend to give the people sky and heaven in order to win the election!!! This is not politics - for me it is totally unacceptable that the Government's deficit went up so drastically during the last 10 months. Instead of taxing all the time the middle class, who already have miserable wages, the Government should try to reduce its on expenses and at the same time reduce ineffficiences in most of its companies!!! We, workers, are suffering and suffering all the time!!! However Dr. Gonzi seems to deaf or otherwise pretends not to listen to the plea of the people!!! The PN's electoral programm now is a Boogie Boogie....hehe....we need to stand up and be counted against all these anti-social measures!!!!!
Ernest Vella
Nov 4th 2008, 15:20
Who told you that the next general election will be surely won by MLP? You dream a lot while the goverment is awake fighting against the globalised world problems...Opposition...wake up and give a smart help...don't remain in the reception class...we're getting moving to a new year
N.Tabone
Nov 4th 2008, 13:08
@keith davis
I would totally agree with what you said regarding our taxes if and this IF is big
Our policlinics were open (remember some of them were closed by your beloved govt.)
I would go to hospital and actually get treated properly (i.e. my file would not be lost, i wouldn't be left waiting for and opertaion and so on)
The roads didn't have pot holes in them which everytime ruin my car and are costing me a great deal of punctures
@francesca abela
I would give the guys a chance if this was their first or second or even their third budget but they have been in office for the last 20 years! If someone betrays you not once not twice but all the time would you give him/her a chance? That is how we feel dear Francesca, remove your blue spectacles and start seeing reality for once
Robert Cassar
Nov 4th 2008, 03:17
Can someone in Brussels help the Maltese people with regards the cost of cars in here! It’s pathetic what the government had done. I voted yes for EU to have freedom of assets and to have same status as any other European Citizen however our government is treating us differently. Why do cars cost more in Malta then in Italy and UK for example? Why I am not allowed to go to UK or Italy and buy my own car and bring it over to Malta? Why do I HAVE TO PAY MORE FOR THIS? Can someone in Brussels make something on this?
Saviour Sam Agius
Nov 4th 2008, 01:34
Do you see anything positive in the previous Labour Governments too? I hope you do because otherwise, as I see it, this is a situation of what we call in Maltese: Il-ħmar jgħajjar 'il denbu.
Mario Mizzi
Nov 3rd 2008, 23:55
Pity that a general election comes once every five years!! Guess that summons it up.
Duncan Sant
Nov 3rd 2008, 23:10
@Francesca Abela
Same can be said for Nationalists who see nothing good in MLP governments....so there you go, same of thew same!
Carl Buhagiar
Nov 3rd 2008, 21:20
@ Francesca Vella
You really impress me. Nevertheless you seem to be new on this commentary as you are not even conscious of what certain blues works hard to make everything coming out from Labour bad and evil. Yes we can do a lot more to our country, next Sunday afternoon be in Valletta and show yourself against this type of stupid democracy we're having in Malta.
@ A Mangion
Your apologies are worthless. The problems you mentioned have been brought by the same Nationalists government. Taxpayers don't care about employment or deficit figures, they only feel that whenever the Government is faced with another of its traditional problems it always turns on them heavily.
As I previously said, we're living off target and led by a misleading administration.
V.Vella
Nov 3rd 2008, 19:07
@I.Galea
That is one reason I voted YES.To have the EU breathing down the goverments neck all the time, that way we can stop things like
Employment on the eve of the elections,remeber KMB.
St Annes square Sliema denied to the people .
A months wages for a job in the oil industry in Libya.minn kien ghadu hemm.
Upgrading of schools that never happened.( Remember siggiewi primary school had faulty ceiling slabs which passed tests in 1984.
I better stop here cause the list is never ending.
Yes keep it up EU breath down thier necks
philip pace
Nov 3rd 2008, 18:30
The Government has LESS than 4 years and 5 MONTHS to serve.
Hope that it stays there and says/promises one thing and does the other.
During this time it shall serve well and shall enter the Guiness book of records for the most unkept pre election promises.
Never count the chickens before they hatch!
By the way I am neither a moaner or groaner but simply a realist to realise well enough that promises are there to be broken.
Lawrence Martinelli
Nov 3rd 2008, 18:26
While in Malta last year people kept telling me the Euro would bring in flocks of visitors.....not having to change currency would encourage more visitors from Euroland.
Ignorant me kept saying.....one thing for sure it will do......raise prices all round.
Yes I know....some people will say.....the decrease (instead of the increase) is due to the financial crisis. Was it better from January till August ?
Was the price of essential goods steady then ?
From what I hear the main increase in tourists came from cruise visits.
Was joining the E.U. not enough ?
At least monetary freedom would have left some lee-way to ANY government.
Now Merrs. Barroso , Almunia & of course , Herr Hauptmann in Frankfurt ,
are directing the traffic. Well.....this is what happens when one plays in the Premier League with the " Big Boys ".
Mark Piscopo
Nov 3rd 2008, 18:05
@Att:Francesca Abela
I am totally fed up living in Malta with the lowest wages in Europe and the highest inflation rate in Europe. I am totally fed up of being governed for 20 years heading for another five year with the same government. I am totally fed up with all these illegal immigrants arriving in Malta. I am totally fed up with the implemented tarrifs of Water and Electricity by our dear Prime Minister.Honestly I hope that you will never groan or moan but be assured that there are people who are suffering with these high taxes and will suffer more in the future with this drastic increase in water and electricity bills.I am very impressed in a negative manner with you comments. Let people talk is this a democratic county or not?
Brandon Camilleri
Nov 3rd 2008, 18:03
Hey everyone...give this governemnt some breath. We are now facing a crisrs as it always happened after the election and removed some subsidy here and there. As in the other PN legislations the nation will have to go through the pain now and then show just before the election how good we are.
For some here I just have to say that this goverment went berserk in it's fiannces in ina few years time it will go bankrupt. The ever growing expenses without adequate economic growth from outside the country is not realising. THe growth we have depends solely on the goverment's expenditure and the EU grants. Should the govermnet stop spending, the fiannces will collide. Up to a year ago we were in good hands and see what we are getting.....higher utility bills than what we have now, higher fule prices with the increase in tax to be mentioned in this budget, higher car tax, higher alcohol prices etc....Do you really hink that this is in the interest of the environemnt..........no it is the people that fund the PN that will benefit form all of this to the expense of the majority of the peolple.
Keith Davis
Nov 3rd 2008, 17:37
To all concerend, please stop repeating things which people say. Start investigating the real facts before perpetrating stories or figures.
It seems the maltese want all the things for free or cheaper then they really are!
Who do you think pays the bill when we go to the local polyclinic or to the governemt's hospital, or for the roads, or for subsidies in consumption, or for light in the streets?
I am sorry to wake all of you up but we pay them all in the end with taxes! So please stop begging the governement for subsidies and ask to be given the real bill so that we do not pay another tax to cover the consumption of others!
l Galea
Nov 3rd 2008, 16:35
Francesca Abela
We've heard your "give the guys a chance" from other similar pn elves.
It also reminds us of your ex-leader who was metaphorically stabbed in the back by his own comrades who went on tv just before the election and pleaded "give us a chance". The people did not give him a chance.
Neither are we going to do it now Francesca because we are fed up with your arrogant and incompetent MINORITY Gonzipn Government. WE HAVE HAD MORE THAN ENOUGH.
A Mangion
You must be joking. Scrutinized by the eu means that it is the eu dermocrant petty dictators who are deciding what we must do, and not our elected representatives. The most prominent and important uncertainty that we have in Malta is your arrogant and incompetent MINORITY Gonzipn Government. No wonder someone had long ago called the PN the course of Malta!
mike pace
Nov 3rd 2008, 16:08
What a bleak Christmas its going to be for the middle class and low income earners when you see the deficit in this tiny island of ours you think that your are living in U.K. or anywhere in a richest country in the pacific were the volume of taxation its more lower than ours .
Its time the nation starts to think that this government its taken us for a ride and he already been warned from Brussels to bring the house in order.
Marcel Dingli
Nov 3rd 2008, 16:06
@ Francesca Abela
About time too !!!! After 25 years. Had been a very active Nationalist in the past. Never again will vote PN especially now that the PN has nothing Nationalist left in it.
P.Scicluna
Nov 3rd 2008, 15:57
A.Mangion.
its very true what you are saying,that public servants decreased from the Goverment. But other institutions such as, Free port, Enemalta, authorities, Zammit clapp, Mater dei and others employ thousands of people. Do you know that 3 months before election zammit Clapp Hospital employed 60, considering this is a small hospital. Do you know that 25% of Staff at Mater Dei are employed by contractors.
g.c.Forte
Nov 3rd 2008, 15:54
@ Francesca Abela........Please be reminded that this government has been in power for 20 years,how many more years needed so we will stop moaning. As from 1986 every year with deficits.What a governments the P.N.are.
Henrik Piski
Nov 3rd 2008, 15:50
The government had 4 years to sort out the Drydocks so the retirement schemes or any any solution should have been provisioned in the last budget. It was always a known fact that after 2008, the government would not be allowed to subsidize the Drydocks, the last four years could have been served to find a decent way out of the misery.
The problem of the rise of energy costs is self inflicted as in the last twenty years, no efforts have been spent to introduce any other alternative energy provision in Malta, that till today the country is depending at almost 100% off fossil energy. Having linked the energy grid to the European grid would already have given a greater choice and would have reduced the pollution in Malta by having switched off the Marsa power plant.
Francesca Abela
Nov 3rd 2008, 14:41
To V. Miclallef and all the other moaners and groaners
This government has four and a half years to do - give the guys a chance.
For once see what you can do for your country instead of seeing what your country can do for you. I am totally fed up with people who are never but never see anything positive in Nationalist governments. Admittedly there are things that still have to be put right but one must see what the priorities are first.
E Gatt
Nov 3rd 2008, 14:35
Remember that a large proportion of the Government’s income comes from taxation paid by large companies. The banking sector, as well as some other major taxpayers have been adversely affected by the economic downturn. Less profits this year means less tax revenue for the government next year. Less tax revenue means a bigger strain on the government deficit.
A Mangion
Nov 3rd 2008, 14:24
@ A.Cauchi and H Piski
Are you aware that the number of public empolyees decreased to the lowest level in the last 20 years this year? Are you aware that its the private sector that is generating new and better jobs? Are you aware that our financed are scrutinised by the EU and no such abuses are allowed? Are you aware that this year we, the taxpayers, had a non-budgeted cost of Eur 55 million extra for energy costs, and Eur 50 for early retirement schemes for Shipyard workers? Add these two figures, and you will soon realise why the deficit figure was off-target. Assuming your maths is better than your comments!!
A Mangion
Nov 3rd 2008, 14:15
It's natural to have a variance on the budget estimates. Those among you who follow what's going on in other countries like the UK, Germany, France and not least the US, all know that even these governments had to revise negatively their budget and expenditure outlooks. No one is a fortune teller and knows exactly what's for us in the future. But we can make projections and work on those lines to achieve a common aim.
I do not like to pay more for energy costs etc.. But I do admit that i live in a world full of uncertainties and understand what's going on away from these islands. I'd rather have a government which face realities and makes us aware of the difficulties out there, rather than having a double faced government which hides what's going on.
So all these comments that projections were not met are useless and childish cause noone including yourself would have depicted the current dark moment the world is facing, including tourism and manufacturing.
Marcel Dingli
Nov 3rd 2008, 14:09
@ Tonio Aquilina
When the PN took over it found a surplus of 500 million. Now we have 3500 Million DEBT. What crater are you talking about ? Are you living in Malta Mr Aquilina?
l Galea
Nov 3rd 2008, 14:04
tonio aquilina
Do you call LM500 million in Malta's coffer a crater?
Then what do you call nearly €4,000 MILLION which the Nationalist Government has dragged Malta into?
Thank's for confirming that the eu is costantly breathing down Gonzipn's neck.
That shows how independent and sovereign we are to decide our own affairs since we became eu members!
Henrik Piski
Nov 3rd 2008, 13:01
Taken from the budget 2007 delivered the 15th October 2007: " The Government deficit for 2007 is expected to reach Lm37.2 million or 2.11% of GDP. This is projected to be Lm30.2 million (1.21% of GDP) in 2008 or, as the context requires, other member going down to Lm3.8 million (0.17% of GDP) in 2009 and turning into a positive firms of balance of Lm25.5 million (0.95% of GDP) in 2010." The actual grow is almost threefold and the Maastrich criteria for not increasing the government deficit by not more than 3% is not fulfilled. Can we take the coming Budget serious when the last budget has not been respected by the government?
tonio aquilina
Nov 3rd 2008, 12:50
Dear Mr Cauchi
Please note that Brussels monitors all our finance and they do not have the check any Christmas Bonanza. Forgotten are the days when we had a crater in the late 80s !!
V.Micallef
Nov 3rd 2008, 12:21
Tonight the Maltese people will be expecting, among other things, whether the Nationalist Party would be keeping to its pre-electoral pledge of cutting income tax rates including the top rate in this Budget. One thing is for sure – the Nationalist Government will not be able to keep to the pledge of reducing the Budget deficit to 1.21 per cent of Gross Domestic Product (GDP) by the end of this year as projected in last year’s Budget.
A.Cauchi
Nov 3rd 2008, 12:15
Inform Brussels that we had an early Christmas in Malta during the first 3 months of 2008. It cost Santa an extra €70 million.