Finance Minister Tonio Fenech yesterday would not commit to the 2010 deadline set by the European Commission for Malta to get its financial house in order.

"We will aim to reach the EU target but the situation is so fluid it is too early for me to say whether we will make it. Obviously, we will work towards it but the economy is passing through a very difficult patch and we don't know yet when the worse will be over."

As for this year, Mr Fenech said it would be practically impossible to meet the deficit targets.

"We are doing our outmost in the circumstances to try to keep our budget deficit below the three per cent mark this year but even on this I cannot give any assurances," he said.

Presenting his first budget last October, Mr Fenech had forecast that Malta would end this year with a deficit of 1.7 per cent of GDP. Although he revised his position two months ago when the Commission started excessive deficit procedures against Malta, he was still optimistic that Malta would be able to keep its deficit levels under the EU benchmark this year.

The European Commission yesterday gave Malta till the end of 2010 to rein in its deficit to under three per cent of GDP.

Mr Fenech said things on the revenue side went through a worse turning than predicted and "it will be practically impossible to keep up with the deficit projections ann-ounced in the last budget".

"The recession is having a much bigger impact on us than we thought, so much so that revenues are effectively much lower while we are continuing to help ailing industries and businesses to survive during this very difficult period.

"According to the latest revenue and expenditure figures we have, it seems we will still end the year over the three per cent reference rate although at a lower deficit than in 2008," he said.

Asked why the government had only now accepted that it would not meet its targets, Mr Fenech said that "no one could predict the impact of the recession on our economy last October".

"All of this obviously has a bearing on the state of the public finances, particularly the deficit. However, as we already said, our focus at the moment is saving and creating employment even at the cost that the deficit increases."

Brussels has given Malta until the beginning of January to spell out the measures it will be taking to comply with its recommendations.

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