The possibility of new EU sanctions being imposed on Malta loomed larger yesterday when Brussels confirmed the island had surpassed the three per cent of GDP deficit threshold established for member states.
Malta ended 2012 with a deficit of €226 million, an increase of €43 million over 2011
After verifying the data sent by member states at the beginning of this month, Eurostat, the EU’s statistics office, confirmed that Malta had closed the year with a 3.3 per cent deficit.
This was 0.3 per cent higher than the bloc’s threshold and half a percentage point higher than the figure projected by the previous Nationalist administration.
Malta is in technical discussions with the Commission in a bid to avert a new Excessive Deficit Procedure (EDP). But Commission sources yesterday re-confirmed that it is highly likely the EU executive will recommend the start of a procedure against Malta.
The final decision is expected to be taken next month when the Commission publishes a new set of economic forecasts for the following two years which will include specific country recommendations for all the 27 member states.
In the past, the Commission had warned the island against slippages in its public finances, a common occurrence in Malta’s budgets.
According to the data published yesterday, Malta ended 2012 with a deficit of €226 million, an increase of €43 million over the 2011 figures.
It was only last year that the EU closed an EDP started against Malta in 2009 when the country’s deficit rose to 4.8 per cent of GDP.
Debt was also on the increase in 2012 – a direct consequence of recurring deficits.
Eurostat said that Malta closed last year with a national debt of 72.1 per cent of GDP, equivalent to €4,871 million or an increase of €264 million over 2011.
Malta is hardly swimming alone in choppy waters as, according to Eurostat, 17 EU member states closed last year with a deficit surpassing the three per cent threshold.
Spain (-10.6 per cent), Greece (-10 per cent), Ireland (-7.6 per cent) and Portugal (-6.4 per cent) reported the highest deficits at the end of last year while Germany (+0.2 per cent) was the only member state reporting a surplus.
With regards to public debt, Greece (157 per cent) and Italy (127 per cent) reported the highest levels while Estonia (10 per cent) had the lowest outstanding debt.