EU to give Malta extra year to narrow the deficit
The European Commission is to recommend that Malta be given an extra year to cut its deficit to the levels set by the EU's financial rules.
The EU last July adopted an excessive deficit procedure (EDP) against Malta, ordering the island to bring its deficit down to under three per cent of GDP by the end of 2010.
However, Malta asked for more breathing space while the economy was still recovering from a recession and the Commission is today expected to accede to the request.
The final decision is expected to be taken by EU's Finance Ministers in the coming weeks. However, the Commission's recommendation is not likely to encounter any objection.
"In our assessment of the measures being contemplated by Malta to correct its deficit, the Commission found that, over the past months, Malta did indeed take effective action to lower its deficit," a Commission official said.
"It is also a fact that Malta is being hit by the global recession much more than we anticipated. This has prompted us to accept Malta's request and we will now be recommending to member states that Malta should be given an extra year, until the end of 2011, to bring its deficit down to three per cent of GDP."
Other member states are experiencing higher deficits than Malta's, including Germany, France and the UK, which have already been granted extensions to put their finances in order.
But the extension will come at a price because Brussels will want to monitor more closely how the island's finances are being managed.
"There will be enhanced surveillance of Malta's public finances as this is now necessary in view of the new deadline for the correction of the excessive deficit. This will require timely and regular monitoring of the progress made in the implementation of the fiscal consolidation strategy to ensure the correction of the growing deficit. In this context, Malta will have to submit more regular and precise updates on its financial situation to the Commission," the official said.
Malta ended 2008 with a deficit of 4.7 per cent of GDP and is projecting that this will drop to 3.8 per cent for 2009, with the final data still to be published.
According to the Commission's recommendation, Brussels is now expecting the island to stick rigorously to its projected deficit of 3.9 per cent in 2010 and lower it to at least three per cent in 2011.
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Robert Scullion
Jan 28th 2010, 14:33
@lgalea
yet another doom-ladened anti-EU waffle from you
Its funny how you criticise anything European, yet the moment something comes up that you like, its the truth and must be believed. Yet something comes from the Government or the EU is must automatically be propaganda and evil.
Still nice that you added links .. perhaps you could provide the links about the death penalty in the Lisbon Treaty. Oh do you know when the first execution takes place? Someone 'in the know' as yourself must have that information
lgalea
Jan 27th 2010, 22:43
2.
Meanwhile, the WSJ notes that the euro has lost value and that "persistent fears about Greece's fiscal situation have turned trade in the euro into a vote on the currency bloc's credibility." A new publication by Econ Journal Watch, entitled "It can't happen, It's a bad idea, it won't last: U.S. Economists on the European monetary union and the euro, 1989-2002" looks at the experiences with the euro and its prospects.
http://online.wsj.com/article/SB40001424052748703699204575016471022980124.html#mod=todays_europe_page_one
http://online.wsj.com/article/BT-CO-20100121-705471.html?mod=WSJ_latestheadlines
http://online.wsj.com/article/SB40001424052748703699204575016822374513804.html#mod=todays_europe_opinion
http://euobserver.com/9/29328
Greek deficit 'endangers' euro, EU commission says
http://euobserver.com/9/29346
ECB and rating agencies issue warnings on EU debt
lgalea
Jan 27th 2010, 22:40
Paul Smith
I didn't say that it was you who tried to belittle Malta Mr Smith.
And NO the euro didn't help Malta. In fact, the governments of countries who have adopted the euro have their hands tied because they cannot adjust their economies to take care of the international and internal situation. The euro will be out in a few years.
Have a look at the following links.
http://www.welt.de/die-welt/politik/article5938285/Der-Euro-Raum-kann-zerbrechen.html
http://www.welt.de/wirtschaft/article5935397/Oekonom-der-Deutschen-Bank-warnt-vor-Euro-Crash.html
Die Welt features an interview with the Chief Economist of Deutsche Bank Thomas Mayer. When asked if he is worried about the euro, he answers "The situation is more serious than it has ever been since the introduction of the euro. The trouble in Greece plays a key role for future development." When asked what the worst case scenario could be, he answers: "If the Greece situation is handled badly, the Euro-zone could break down, or suffer major inflation".
He added that "Neither the European Central Bank nor the Commission nor any other EU body can force Greece to implement necessary reforms in exchange for help."
Robert Scullion
Jan 27th 2010, 19:39
@lgalea
yeah look at another small island country in Europe that had its own currency .. Iceland. Didn't they do well being outside the euro & the EU. So much so that they are trying to join now.
However coming from a euro-septic like yourself I'm not surprised at your comment.
Christian Sciberras
Jan 27th 2010, 16:35
Deficit? Who cares! Let's all be CHARITABLE first (then comaplain about taxes later)!!
A Debono
Jan 27th 2010, 15:41
For starters the gov can do without having to pay the 55m for buses from our tax
Paul Smith
Jan 27th 2010, 15:15
lgalea
I all due respect, and not meaning to belittle Malta, but in the grand scheme of things, Malta is irelivent. It has the GNP of a small UK city. Joining the euro helped Malta deal with $147 oil prices for sure but hurt you in other ways. Malta is so small it does not matter in or out.
A. Curmi
Jan 27th 2010, 15:14
I personally wouldn't blame the government or any other political party who was in the government. We have to get our facts straight on our little island;
A country improves it's surplus by exporting more than it imports, in our case we import more (a lot more) rather than export more of our products. As a tiny island we don't have any natural resources and the only exports we have are potatoes, kunserva, programming and tourism which seem to be the major markets. if we want to lower our deficit it has to come from us if we support our maltese products more rather than foreign brands we can help the economy by doing simple things, such as when we do our daily groceries. But it's useless we Maltese have the mentality; "li ta' barra ahjar minn t'hawn".
However, to reduce our deficit it will be almost impossible to do it within 2 years the EU should really have thought this through about our island we DO NOT have any natural resources that we can export like coal, wood etc..., unlike other EU member States. I think they should hire new economists.
Paul Smith
Jan 27th 2010, 14:00
The PIIGS will take down the euro
Portugal, Ireland, Italy, Greece and Spain.
One size was never going to fit all - The UK will sit and watch from the sidelines - competitively devalue sterling (already -30%) and being the worlds 11th largest exporter and an oil producer, should be out of our big mess within a couple of years. An economic union has been good for France, Germany, UK but monetary union was/is never going to work - how long is Germany going to continue to prop up the PIIGS? The party's Over.
P.Cassar
Jan 27th 2010, 13:57
HOW COME WHEN THE DEFICIT IS GROWIMG ALARMINGLY!!!!!!
AND 50 MILLION EUROS AT LEAST TO 300 BUS DRIVERS!!!!
POOR MALTA.
lgalea
Jan 27th 2010, 13:40
Paul Smith
And the people were led into believing and some are still trying to continue to make them believe that the euro was Malta's saviour in the world recession.
Paul Smith
Jan 27th 2010, 13:18
Roubini said for all the focus on Greece, Spain may eventually pose a bigger threat to the euro zone because it’s the region’s fourth-largest economy and has higher unemployment and weaker banks. Spain’s jobless rate is more than 19 percent, almost twice the EU average.
“If Greece goes under that’s a problem for the euro zone,” he said. “If Spain goes under it’s a disaster.”
Dont know why the article in TOM mentions the UK - we are not in EMU
going to be an interesting few years - thats for sure
Paul Smith
Jan 27th 2010, 13:17
Jan. 27 (Bloomberg) -- New York University Professor Nouriel Roubini said he’s never been more pessimistic about the future of European monetary union, saying Spain poses a looming threat to the euro region holding together.
“Down the line, not this year or two years from now, we could have a breakup of the monetary union,” Roubini said in a Bloomberg Radio interview from the World Economic Forum’s annual meeting in Davos, Switzerland. “It’s a rising risk.”
...
“The euro zone could drift essentially with a bifurcation, with a strong center and a weaker periphery and eventually some countries might exit the monetary union,” said Roubini, who predicted the recent financial crisis a year before it began. “This is the very first test” of the single currency bloc.
Economies including Spain and Greece are threatened by fiscal imbalances and declining competitiveness, Roubini said. Membership in the euro means they can no longer devalue the currency to export their way out of recession, he said.
cont:
Christian Mifsud
Jan 27th 2010, 12:21
According to Gonzi, before the elections, we were supposed to have a SURPLUS not a huge deficit, even if he new that a recession was coming.
Galea. L
Jan 27th 2010, 12:16
Gianninu Saliba
How pathetic Gianninu. It's like mother or father wanting to know how their child is spending his money because he isn't capable of spending it correctly and running into massive debt.
Paul Scerri
Jan 27th 2010, 11:24
This is embarrassing! We were given the third deadline because the government cannot keep its finances in place. Way to go, Mr. Gonzi, for making us look disorganized ever since we joined EU.
So much for the ridiculous raise in utility bills, and the not so obvious ones. Air Malta is getting expensive by the day, petrol the same. People are getting laid off from factories and being employed by public institutions. Everything falls on the tax payer.
@Mr Saliba: Are you even serious? Those "effective" measures were balanced out by bad expenditures. And unfortunately there's an incredibly dense smell of corruption in every government announcement.
Louisa Briffa
Jan 27th 2010, 11:12
@Mr Saliba
Yes Mr Saliba Gonzi did take action....by putting up OUR utility bill sky high to a ridiculous amount. Actually highest in Europe. What are you congratulating Gonzi for? We have been given an ultimatum because out deficit is too high. We shouldn't be in a deficit in the first place!!!! We were given one extra year not because Gonzi did a good job but because they are giving us a THIRD chance!!!
g.c.Forte
Jan 27th 2010, 10:45
@ G.Caruana.......Am I understanding correctly that with your argument we have a inefficient and irresponsible government that can`t be responsible enough to govern our financial matters,and wanted somebody to pull his ears.............OH my God.
G Caruana
Jan 27th 2010, 10:23
Thank God we have EU....otherwise....! It is like that we have a nanny taking care of us. Are we capable to be proactive and not leave EU give us the yellow card? Are we capable to stick by EU rules or not.? Do we think that EU is ignoring global trends and recession?
A. Farrugia
Jan 27th 2010, 09:57
How will the public transport reform have an impact on this...? Was the EU consulted in this respect or are the authorities hoping that the compensation won't have an impact on the fiscal measures to bring our deficit in order?
g.c.Forte
Jan 27th 2010, 09:56
Can anyone enlighten me of how the government is going to reach the target to narrow the deficit till the end of 2011.... I hope and wish that no more tariffi, taxes,adjustments and all any other words, that means, taking money from your pocket, will be implemented.
John Ellul
Jan 27th 2010, 09:14
I remember the finanzi fis-sod slogan. By what stretch of the imagination?
John Schembri
Jan 27th 2010, 09:11
U l-kbir ghadu gej!
Gianninu Saliba
Jan 27th 2010, 09:09
There you are Joseph, the Commission said it: "In our assessment of the measures being contemplated by Malta to correct its deficit, the Commission found that, over the past months, Malta did indeed take effective action to lower its deficit." You have to find some new 'gloom', Joseph. By the way the 'doom' that you envisaged never materialized. Well done Dr. Gonzi. Keep it up and show the kid (with aspirations of becoming PM) how it has to be done. Joseph, one advice: "When you do something make sure it's the right way... sorry, left is out of the question".