It is not true that the budget has been revised following a warning from the European Commission, as claimed earlier today by Labour MEP Edward Scicluna, the Finance Ministry said.
Prof. Scicluna accused Finance Minister Tonio Fenech of repeatedly failing to heed two explicit European Commission warnings about Malta's deficit.
He said the Commission had warned the government about the deficit prior to the publication of the 2012 Budget but it was only after an implied third and final warning in the beginning of January during the bilateral talks held with the Commission that the government announced spending cuts worth €40 million (0.6 per cent of GDP).
Prof. Scicluna said that in a reply to a set of parliamentary questions, Economic Commissioner Olli Rehn said that the government's 2012 budget launched in November still left Malta's public finances in a state that was "not consistent with a sustainable correction of the excessive deficit".
He added that the Commission had already expressed concern about Malta's excessive deficit in the Commission's 2011 autumn forecast and later in writing to Minister Fenech, Prof. Scicluna claimed.
But the ministry said this afternoon that the Commission’s reply said the opposite of what Prof. Scicluna was claiming.
The Commission had in fact said that it had carried out its assessment on Malta’s finances and its conclusions were that the government had taken positive and timely measures to avoid excessive deficit.
The showed the Commission’s confidence that the decisions taken by the Maltese government based on the budget for last year should lead to the improvement of Malta’s financial situation in a way that would see the deficit going down to less than three per cent of the GDP.
This was confirmed in April when the European Commission certified that Malta ended 2011 with a deficit of 2.7 per cent. It was one of just six Eurozone countries that managed to do this.
The International Monetary Fund went a step further and defined the reduction in the deficit as one which most strengthened the financial situation among advanced states.
In previsions on economic growth for 2012, the IMF forecast that Malta would have the third biggest growth in the Eurozone this year.