A deal sealed yesterday by EU Finance Ministers for a loan of €78 billion to shore up Portugal’s tottering finances should not have any negative effect on Malta’s public finances.
Speaking to The Times at the end of a meeting of EU Finance Ministers in Brussels yesterday, Finance Minister Tonio Fenech said the money to be forked out by the International Monetary Fund (IMF) and the EU will serve to help generate funds on the international markets for Portugal.
“Unlike the case of Greece, we will not be forking out any more money as we (the EU) have already made a €400 billion guarantee to be used by the EU as part of the €750 billion rescue fund for the euro area. So there will be no direct money transferred to Brussels even though eventually Malta’s part of this guaranteed loan will be added to the country’s exposure.”
Asked whether there was any risk that Greece, which was given a €110 billion bilateral loan last year, may default, with severe consequences for all those who have lent it money on a bilateral basis, including Malta, Mr Fenech said that “currently there is a lot of speculation although the reality may be different”.
“The EU has already made a statement that Greece is on the right course to restructure its economy but needs to step up its pace,” he said, warning against speculation at this stage.
Last year, Malta forked out €23 million as part of the EU loan to Greece. Following that crisis, the eurozone created a temporary rescue fund to be used in similar cases, a facility which Ireland and Portugal have made use of.
Speaking at the end of the meeting, the EU’s Commissioner for Economic and Monetary Affairs said the agreement with Portugal was the latest step in “safeguarding financial stability in Europe” and would “pave the way for a competitive economy and economic growth” in the country.
The loans will be supported by enhanced external monitoring of Portugal’s budget, reforms of the country’s health system and a sweeping privatisation programme.
Portugal was also told to reform its labour market, judicial system, network industries (generally public services) and housing and services sectors in order to encourage growth and competitiveness.
On the situation of Greece, EU Finance Ministers refused to contemplate any changes to Greece’s bail-out terms, or any notion of debt restructuring, as speculated before the meeting. Instead, they continued to exert pressure on the Greek government to carry out measures designed to cut the country’s deficit.
Commissioner Rehn said Greece “must step up the implementation of its fiscal and structural reforms” and start implementing its “ambitious” privatisation programme “without delay”.
Greece is hoping to receive €50bn from the privatisations.