Malta’s commitment to cut its deficit to 2.8 per cent of GDP by the end of this year and by a further 2.3 per cent in 2012 were yesterday described as “encouraging” by the European Commission.

It seems the commission is now looking at our situation from a much more positive angle

The announcements made in the last Budget were still being analysed but “Malta is taking the necessary measures to contain public expenditure and consolidate its public finances,” the Commission’s spokesman for the Economy and Monetary Affairs, Amadeu Altafay, said.

If this data is confirmed next year by Eurostat, Malta will be on its way of closing the Excessive Deficit Procedure (EDP) started against the island in 2009, according to the Commission.

Finance Minister Tonio Fenech said he had received the same “positive” feedback.

Speaking to The Times following a bilateral meeting in Brussels with Commissioner Olli Rehn – who is responsible for keeping an eye on national budgets – Mr Fenech said the Commission now better understood the government’s latest projections. Mr Rehn, he said, confirmed that Malta was on the way to recovery.

Only a few days before the budget, Mr Rehn had sent a warning letter to Malta and another four EU member states asking them to take measures to correct their deficits by mid-December if they wanted to avoid sanctions.

According to the Commission’s autumn economic forecasts, Malta will not reach its target of reducing its deficit to below three per cent of GDP by the end of 2011.

“We had immediately replied to the Commission’s letter and it seems it is now looking at our situation from a different and much more positive angle,” Minister Fenech said.

Malta is hardly alone in being under an EDP. Nearly all 27 member states, with the exception of Sweden and Estonia, have received similar warnings from Brussels. Malta will be one of the few countries to cut its deficit this year if the data announced by the government are confirmed.