The European Commission would not comment on Malta's request for an extension of the deadline to rein in the Budget deficit although sources close to the EU Executive say it is likely to be accepted in the wake of a concession won by four other countries.
Malta is in discussions with the Commission over a possible extension since 2010 is projected to end with a slightly higher deficit than this year, which is already over the EU limit. Rather than come in line with the EU's benchmark - set at a deficit of three per cent of the GDP - the government forecasts a rise to 3.9 per cent from 3.8 per cent this year.
Although this is lower than in other countries such as France, Spain, Ireland and the UK, the Commission has so far argued that the Maltese scenario is not comparable given that the island was not as badly hit by the international crisis.
When asked whether the Commission was actively considering Malta's demands, a spokesman declined to comment, saying only that a decision would likely be taken at the beginning of next year, probably in January.
"The Commission will be reviewing Malta's situation early next year when the first six-month deadline expires," a spokesman for Economic and Monetary Affairs Commissioner Joaquin Almunia said when contacted.
"It will only be at that point that we shall review whether Malta has made any progress on the EDP (excessive deficit procedure) demands agreed last July by EU Finance Ministers and then draw our conclusions."
After posting a deficit of 4.7 per cent in 2008, Malta was given until the end of 2010 to get back in line with the EU's Maastricht criterion of three per cent.
Malta, however, has already informed the Commission that the economic situation does not allow the island to reach the EU deadline. It argues that it needs more time in order to ease the pressure on the economy during the recession and concentrate on job creation.
Sources close to the Commission said that although officially the Commission was not in a position to comment, "it is very likely that Malta will be given an extension".
On Wednesday, the Commission agreed to give a one-year breathing space to France, Spain, Ireland and the UK to correct their ballooning deficits.
"This decision is good news for Malta. We can't really imagine the Commission saying 'yes' to these large member states with very high deficits and 'no' to tiny Malta," the sources said.
"The fact Malta has managed to reduce its deficit in the past year despite the recession will also be looked upon positively by the Commission as a sign of commitment by the government to reach the EDP goals."
Currently, 20 out of the 27 EU member states have a deficit higher than three per cent of GDP and the remaining seven member states are expected to follow suit next year.
The Commission has already conceded that the recession is taking its toll on public finances all over the EU but warned that member states should start implementing deficit reduction reforms from 2011 onwards.