The Prime Minister warned today that the situation in Libya could have a serious impact on Malta's economy.

He was speaking at a special meeting of the Malta Council for Economic and Social Development (MCESD).

He said that the government's top priority had been the safe evacuation of Maltese nationals from Libya.

Now that that priority had been successfully achieved, the government, with the social partners, needed to identify the best way to ease the impact of the crisis on the Maltese economy, Dr Gonzi said.

He said the economy had managed to withstand two years of international economic turmoil, but the Libyan crisis now presented a fresh, and serious, challenge.

The MCESD, he said, was being invited to analyse what had taken place and the way forward in the interests of the Maltese economy.

Some 300 Maltese worked directly in Libya but several hundred more work in Malta for companies providing products or services to the Libyan market. Maltese companies also have investments in Libya running into millions of euro in sectors including tourism, medical services, oilfield services and engineering and infrastructural works.

The Times reported last week that 35 companies had requested help from the Chamber of Commerce following its call on businesses with interests and investments in Libya to come forward and present their concerns.

“A number of companies in Malta are entirely dependent on the Libyan market so obviously they are very worried about what is happening over there. There are questions about payments due as well as large quantities of stocks stored in Libya,” Chamber president Helga Ellul said.

Businesses which have invested in Libya were concerned about financial security and uncertainty, she said, adding that several companies were seeking to recoup payments due on invoices issued to Libyan clients.

Companies were also facing hardship as they tried to withdraw their funds from Libyan banks: balances were dropping with the Libyan dinar’s devaluation.

A string of challenges included the repatriation of stock and other assets to Malta and maintaining payroll costs – even for humanitarian reasons – when business was at a standstill, with no indication of when operations might resume.

“Further undesirable consequences include increases in insurance claims reported by the financial sector,” the Chamber added. “Companies that have invested in Libya are now faced with the prospect of having their assets and substantial investments stuck in the country. Others which have invested in the steadily growing export market have also been severely disrupted. The volatile situation has further compromised the chances of certain companies recouping historical debts.”

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