Bank lending rates in Malta are slowly but surely going down and the gap between them and the eurozone average is narrowing, Central Bank of Malta governor Josef Bonnici said yesterday.
The governor has been criticising the higher rates in Malta for some years – and said he felt the “moral suasion” he had used has had the desired effect.
Malta’s rates are still the fifth highest in the eurozone, at 4.6 per cent for loans up to €1 million (eurozone average: 3.5 per cent), and 3.8 per cent for loans over €1 million (2.1 per cent).
“We were seeing the gap widening until 2013,” he said, noting that the yields from Malta Government Stocks (MGS) will probably go down in the future, which would put pressure on banks to reduce their lending rates, as they would have more liquidity.
The governor’s assessment of the economy was positive. It had grown by 13 per cent since 2008, with unemployment declining in 2014. He said he was pleased to note that much of the growth had come from public and private investment. He also announced that the government has set up a task force to prepare studies on how a Development Bank would operate in Malta, to ensure that it complements – rather than competes with – commercial banks.
Prof. Bonnici has his own ideas about how the bank could help the local economy
The task force will need to discuss its proposals with the European Commission as the bank would help to finance SMEs and projects – but must not contravene state aid rules. Prof. Bonnici has his own ideas about how the bank could help the local economy and said it could also take sectors off the government’s books, such as social housing. This tactic had proved very successful overseas.
He also proposed that the development bank could issue bonds to raise money which could then be used to finance projects. He stressed that while wealth funds might not be interested in investing in projects, they might be interested in buying such bonds.
He also announced that the Governing Council of the European Central Bank will be held in Malta next October, for the first time, while Malta’s culture will be featured in this year’s ECB European Cultural Days, with two to three events planned every week for a three-week period in November.
The CBM paid its shareholder, the government, €48 million last year, representing its income less the money set aside for reserves and provisions.