The financial turmoil and gloomy international economic prospects will impact the government's budget plans, Finance Minister Tonio Fenech warned yesterday following a meeting of EU Finance Ministers in Luxembourg.
"We are witnessing an earthquake in the financial world which will definitely have an impact on economic growth worldwide. Malta is part of the world and we have to be realistic in the upcoming budget to safeguard the long-term interests of the Maltese economy," he said.
Without specifying how the international scenario will affect the government's plans, Mr Fenech said the economic situation today is completely different from that of a few months ago and the government will have to plan according to the prevailing climate.
EU Finance Ministers yesterday agreed to take common measures to counter the financial markets crisis, primarily addressing the need to strengthen the EU's principal financial institutions.
During their monthly meeting, EU Ministers agreed on an EU-wide deposit guarantee for savers of €50,000. This will also apply to Maltese depositors who until now were only covered for the first €20,000 of their savings.
The figure agreed is the amount of consumers' cash that will be protected in future if a bank crashes.
Despite the fact that the Maltese government is also mulling whether to go a step further by increasing the guaranteed deposits to €100,000, Mr Fenech assured depositors that Malta's financial institutions are not being hit by the current crisis.
"Malta's financial institutions have a very sound base and there are no indications that they will be hit by the current crisis. Our banks invest in bonds and stocks in very sound institutions and so there is absolutely no need to worry. However, we still agreed to put a further guarantee to put people's minds at rest."
Asked whether Maltese financial institutions have experienced any changes in the behaviour of depositors, Mr Fenech said no changes were observed and it was business as usual.
"'We are monitoring the situation closely on a daily basis and there is absolutely no sign of any significant changes."
EU Finance Ministers also vowed to step up cross-border cooperation in the face of banking chaos and declared that "the liquidity of the financial system shall be ensured by all authorities in order to preserve confidence and stability".