Prime Minister Joseph Muscat strongly suggested this afternoon that the European Commission will likely issue excessive deficit procedures against Malta over its failure to keep its deficit below the EU threshold last year.
Whether or not the Commission would be taking the action was now a "matter of semantics", Dr Muscat said at a press conference this afternoon.
However, he said that the meetings with the Commission were "realistic and positive" adding that he was confident that with the government's present plan Malta's deficit would be brought back down to below three per cent.
Finance Minister Edward Scicluna said yesterday that he had had a phone conversation with the EU Economic and Monetary Affairs Commissioner Olii Rhen on Tuesday and he complained that Malta was not being believed in its arguments - a situation for which he blamed the previous government for not keeping commitments made to the EU. (see http://www.timesofmalta.com/articles/view/20130521/local/scicluna-says-malta-not-being-believed-in-talks-to-avoid-excessive-deficit-procedure.470677 )
The government had previously said that it was negotiating with the Commission to avoid the procedures, which will mean Brussels will scrutinise more closely Malta's finances.
When asked on this point, Dr Muscat said he was confident that the government had managed to convince the Commission that it would be able to rein in the deficit without the need for cuts, over and above those contemplated in the Budget.
"It has to be pointed out that these actions have been taken in relation to what happened in 2012 and the fact that we overshot the deficit. Nonetheless, this is not an argument we pressed with the Commission since it is of little interest to the Commission whether the situation is the doing of this government or the previous one.
Malta overshot its budget deficit for 2012 and ended up with an imbalance equal to 3.3 per cent of the GDP - the Eurozone's threshold is three per cent. Moreover, in its spring economic forecast the Commission predicted that Malta would not be able to stick to its Budget commitment to end the year with a deficit of 2.7 per cent of the GDP and will more likely see an imbalance of 3.7 per cent.