Malta is one of just five eurozone countries that have managed to reduce their debt as a percentage of GDP, according to latest figures.

The island’s debt at end of September 2011 stood at 70.3 per cent of Gross Domestic Product, down slightly, by 0.1 per cent, over the course of a year. On the other hand, the eurozone average stood at 87.4 per cent, up by 4.2 per cent, and the only other euro area members which succeeded in cutting their debt-to-GDP ratios were Belgium, Estonia, Luxembourg and Austria.

According to the Eurostat figures, Malta’s outstanding debt at the end of September stood at €4.47 billion, a rise of more than €200 million over the same quarter of 2010. The bulk of the debt, 65.6 per cent, is held in securities while another 3.8 per cent is in loans. The government’s aim is to continue to reduce its debt this year particularly through cutting its deficit, which will automatically trim its borrowing costs.

The highest levels of debt in the eurozone belonged to Greece (159.1 per cent of GDP), Italy (119.6 per cent) and Portugal (110.1 per cent). Estonia (6.1 per cent) and Luxembourg (18.5 per cent) had the lowest. Under the new EU Fiscal Pact, which is expected to enter into force next year, member states will be obliged to cut their structural deficits by 0.5 per cent of GDP per year and to move towards a balanced budget.

Member states with a debt ratio higher than 60 per cent of GDP will also have to reduce their debt levels every year. Half of EU member states are currently in that situation.

Flouting these rules would risk automatic financial sanctions.