Finance Minister Tonio Fenech would not comment on whether the Libyan crisis could derail plans to cut the deficit to below three per cent, saying only the government was “cautious” and monitoring the situation “day by day”.

“We have to keep our feet on the ground about what can actually be done. We have a helpdesk at Malta Enterprise to gauge the difficulties companies are experiencing,” Mr Fenech said.

“Obviously, there’s a limit (to what one can do) because one can’t intervene with the Libyan government... I won’t exclude an economic impact but, at this stage, I’d rather be cautious and monitor the situation day by day.”

Mr Fenech was speaking after an Economic and Financial Affairs Council (Ecofin) meeting in Brussels earlier this week.

EU finance ministers agreed they would abide by a decision taken in Manchester in 2005 which said that, when oil prices rise, governments would not try to counter that by cutting tax, because this would only raise demand and keep the price up.

Governments, Mr Fenech said, would be looking at those strata of society impacted by the oil crisis and seeking to address their problems.

With regard to Malta, he said there was already the energy benefit scheme in place and, by the end of March, the government would submit a report to the Malta Council for Economic and Social Development so that a decision could be taken on whether inflation warranted compensation or aid from the government.