Malta's public finances will benefit from a revision of this year's EU budget, resulting in the island's contribution being cut by €1 million, Commission sources told The Times.

The sources said further cuts could be announced later on this year when another analysis of the EU's 2005 budget is completed.

The revision is due to the fact that about €1 billion remain unspent from last year's EU budget. This was lowest sum to remain unspent over the past years.

In its first three years of membership, Malta has to contribute €59 million a year to the EU coffers. The island is receiving €123 million a year, particularly in cohesion and structural funds. The EU treaties do not allow for a budget deficit, and require the budget to be balanced each year. The surplus, which the Commission seeks to reduce to a minimum, is moved forward to the budget for the following year.

According to the Commission, last year only one per cent of the EU budget, or €1,077 million, was left unused. In view of an extra revenue of €1,292 million, the total reduction in national contributions to the EU budget thus amount to €2,410 million, a record low since 1997.

European Budget Commissioner Dalia Grybauskaite said that better planning and the constant improvement of EU budget management at all levels are bearing fruit.

Another budget revision will be held in June.