The Maltese government yesterday submitted a formal application to the European Commission to adopt the euro by January next year.
By way of a formal letter addressed to EU Commissioner for Economic and Monetary Affairs Joaquín Almunia and European Central Bank president Jean-Claude Trichet, Malta has officially called on the European Commission to analyse whether or not the country’s economic and financial situation is compliant with the established criteria necessary for an EU member state to adopt the single European currency.
In a press conference he addressed yesterday, Mr Almunia said the Commission will start evaluating Malta’s formal request today, so that it will initiate the compilation of the conversion report in line with the Maastricht criteria, which include both economic and legal details.
The Council of Ministers will then start assessing the convergence report and the Maltese government will know whether or not it has passed the test in June.
The formal letter – which was submitted following a decision taken during Monday’s meeting of the Cabinet of Ministers – was signed by Prime Minister and Finance Minister Lawrence Gonzi and Central Bank of Malta governor Michael C. Bonello.
It states that Malta has obtained a high level of sustainable convergence and is expected to be in line with all the criteria indicated in Article 122(2) of the EU Treaty by May this year.
The letter specifies points regarding the adjustment of the government’s excessive deficit, national debt levels and the rate of inflation, as well as interest rates.
While the deficit was reduced to 2.6 per cent of GDP by the end of last year and should fall by a further 0.2 or 0.3 per cent this year, national debt levels are also under control. These were reduced from 74.2 per cent of GDP in 2005 to 68.3 per cent last year, but the government’s target is to reduce national debt to the EU reference point of 60 per cent by 2009.
Prime Minister Gonzi, together with parliamentary secretary in the Finance Ministry Tonio Fenech and the governor of the Central Bank of Malta, addressed the media yesterday evening.
Expressing satisfaction regarding this important and historic step in the process of the country’s European integration and economic development, Dr Gonzi said the difficult decisions that the government has had to take during the past two-and-a-half years are paying off.
“Ambitious objectives were set when the government drafted a document regarding a plan of convergence for the country and although some people were sceptical about this, we are happy to have achieved a number of targets.
“We are optimistic that Malta will continue to maintain economic stability, attract more foreign investment, create employment opportunities and improve the overall quality of life of citizens,” said Dr Gonzi.
The Central Bank governor said that while the country needs to ensure the sustainability of its economic and financial achievements, it also needs to establish a flexible economy to absorb any possible shock that may be caused by negative economic developments at any moment in time.
The parliamentary secretary in the Finance Ministry pointed out the economic significance of Malta’s transition towards euro adoption from a global point of view.
“While we hope to pass the test, the country is already experiencing the effects of economic developments during these past years. Last year we experienced a record as regards foreign investment, and joining the eurozone will mean that Malta will be an even more attractive destination for investment,” said Mr Fenech.