Brussels is expected to keep Malta’s finances under close watch next year as well, judging by a new assessment set to be published by the European Commission today.
Malta was yesterday named as one of seven euro area members states with a “risk of busting budget limits”. Reuters reported it had seen an advanced copy of the Commission’s assessments, known as the European Semester.
The island will have to submit more detailed reports than the other euro area states
Last night the government said it was confident its latest Budget measures were addressing the “risks highlighted by the Commission” and that no further action would be necessary.
Before the official Budget presentation in Parliament last week, the Commission had warned Malta over the possibility of breaking EU rules, particularly on the deficit and debt levels. The government had played that down, saying Brussels was only demanding clarifications that would be addressed in the Budget itself.
However, even after the presentation of the Budget, it seems Brussels still has doubts on the figures presented by the government and is expected to insist on more clarifications in today’s assessment.
According to Reuters, apart from Malta, the Commission will also be warning France, Italy, Belgium, Spain, Portugal and Austria. It reported that the most severe warnings would be given to Italy, France and Belgium, which would be reassessed again in March before further action, including possible fines, were taken.
No further specific reviews are expected in the case of Malta but the island will continue to remain under close scrutiny and will have to submit more detailed reports than the other euro area states.
Malta is facing an excessive deficit procedure that was opened last year. Although normally such a procedure is closed when a country reduces its deficit to below three per cent of GDP –which the island achieved in 2013 – the Commission last year decided to keep Malta’s procedure open as it was still doubting whether the correction was long term and on a sustainable level.
In its latest economic forecasts last month, Brussels made a good assessment of the Maltese economy for the next two years. However, it said that, contrary to the government’s 1.6 per cent projection, the deficit was expected to grow to 2.6 per cent of GDP in 2015 before falling back to two per cent the following year.