Strong economic growth last year brought the fiscal deficit down but also masked the fact that structural adjustment targets were not met, the Malta Fiscal Advisory Council has said. 

In its assessment of the Finance Ministry's 2015 report, the council noted that GDP had grown at a significantly faster rate than expected, allowing the fiscal deficit to decline to 1.5 per cent. The debt-to-GDP ratio had also declined faster than projected, reaching 63.9 per cent. 

The council however noted that expenditure had not always been kept in check, and that in structural terms - that is, when temporary and cyclical effects have been factored out - the underlying fiscal balance had remained stable. The government had originally planned a 0.7 per cent GDP structural effort while the European Commission had recommended a 0.6 per cent adjustment, the council said. 

It acknowledged that the failure to meet targets could be attributable to a number of "special circumstances", such as the organisation of unplanned international events, the need for more expenditure to absorb remaining EU funds and the material difference between expected and actual macroeconomic conditions throughout the year. 

It however urged the ministry to keep a closer eye on things in the future, to ensure targets are not missed again. The government has forecast a structural adjustment of 0.8 percentage points of GDP for this year. 

In its report, the council also suggested that the Finance Ministry dedicate a specific section in its annual report to analysing how well Malta is complying with a eurozone-specific expenditure benchmark. 

The Finance Ministry also ought to make public its views on the various recommendations made by the council, the latter added, arguing that doing so would strengthen institutional dialogue and increase fiscal transparency. 

To read the council's report in full, visit the MFAC website.