Malta’s debt soared to 72 per cent of its economic output last year on the back of bailout money loaned to Greece and guarantees for an EU-wide rescue fund.
However, figures released yesterday by the National Statistics Office and Eurostat, the EU’s statistical agency, also show Malta was one of only five eurozone states to register a deficit below three per cent, as stipulated by the Maastricht criteria.
According to Finance Minister Tonio Fenech, the country’s new fiscal obligations – as part of the EU drive to bail out ailing economies – cost the country 1.3 percentage points in additional debt. This accounted for half the increase from the previous year. Debt stood at €4.6 billion, an increase of almost €350 million over the previous year and €1 billion more than in 2008.
Malta was one of 14 EU states to have a debt ratio higher than 60 per cent of GDP as stipulated by the Maastricht criteria. The island’s debt stood at par with Cyprus and better than Italy, Ireland, France, the UK and Germany.
Mr Fenech said debt would continue to increase as long as the country registered an annual deficit, however he insisted the government’s drive to balance the books was reaping positive results.
At €173.8 million or 2.7 per cent of GDP, the deficit in 2011 dropped by a percentage point from the previous year and by almost two percentage points since 2008. Mr Fenech said the results conveyed the message that Malta had stable finances and this created a climate of certainty. “It sends positive signals to investors,” he said, adding the government’s deficit target for this year was 2.2 per cent.
€350 million
The increase in debt between 2010 and 2011
During the press conference, Mr Fenech confirmed media reports that the new Parliament building at City Gate would be financed by a special purpose vehicle that will receive funds from the lease agreements the government has with Malta International Airport and the Viset consortium.
Malita, a government owned finance company, was set up to raise the money required to fund the €80 million project.
It will be listed on the stock exchange and the public will be asked to participate through a share issue.
Mr Fenech said the funds Malita would receive from the lease agreements were already deducted from the government’s income this year and so the arrangement would have no impact on fiscal projections.
A parliamentary resolution is required for the special purpose vehicle to be set up.