Finance Minister Tonio Fenech has insisted that the Government’s aim is to reach a balanced budget by 2015, by reducing the deficit in a manageable way by an annual 0.5-0.7 per cent. This would help reduce the level of debt to 65 per cent within three years.
Introducing the resolution on the ratification of the Stability Treaty, Coordination and Governance, Mr Fenech said the treaty required governments to arrive at balanced budgets over a 20-year period with public debt reduced to less than 60 per cent of the GDP.
At 72 per cent, Malta’s debt stood at 12 percentage points higher. This would be reduced at a lower rate than the obligatory five per cent over the 20-year period. The treaty would be entrenched in the Constitution, to which the Opposition had already committed itself.
Mr Fenech said the Government had started addressing the public deficit in 2007 and had reached its targets except for 2009 and 2010 because of the international crisis. Malta’s deficit stood at below the three per cent mark, this being one of the lowest in the EU, and would remain so until the end of the year.
During the international crisis the Government had helped local enterprises protect 5,000 jobs and expanded the financial and e-gaming services, tourism and other sectors. This led to the creation of 20,000 jobs, which included those that replaced the jobs lost as well as employees who reached pensionable age but carried on working.
Minister Fenech added that credit rating agencies Fitch, Moody’s and Standard & Poor’s had reported that Malta had taken effective steps to address its deficit and recognised that it was performing better than other economies. On average the level of public debt across the EU stood at 80 per cent of the GDP of member countries taken collectively.
Nationalist MP Karl Gouder said this was a crucial treaty which showed that the EU was committed to achieving long-term financial stability by reining in all member states using pre-set rules and regulations.