Moody's rating agency has welcomed the European Union's decision to close the Excessive Deficit Procedure (EDP) for Malta, confirming that the government had reduced its deficit below the European Union's 3% of GDP reference value.

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"The decision is positive as it underscores the government's effective efforts towards consolidating the fiscal accounts and ensuring the sustainability of public debt," the agency said.

The European Council initiated the procedure against Malta in July 2009, after the general government deficit for 2008 reached 4.6% of GDP, up from 2.3% the previous year. The Council gave the government a year to correct the situation but subsequently extended the deadline to 2011, given the prevailing adverse economic conditions.

At the beginning of 2011, the European Commission (EC) concluded that Malta was on track to meeting its fiscal targets and did not need to take further corrective action.

Last night another ratings agency, Fitch, said that the fact that the Budget was not approved did not pose an immediate risk to Malta's ratings.