Although government figures from the prime minister down have been saying many times over the past months they hope the EU Excessive Deficit Procedure regarding Malta will be lifted soon, considering the decrease of the deficit in 2014, Malta will still have to wait till the Spring Forecast which will be published at the beginning of May, informed sources in Brussels said.
The ongoing Excessive Deficit Procedure for Malta was opened in 2013, because Malta was found in breach of the debt and deficit criteria. In the scope of the upcoming Spring forecast the Commission will assess if a durable and sustainable correction of the excessive deficit is achieved (the deadline for this was 2014) and if the debt is being sufficiently reduced.
Since accession to the EU (in May 2004), Malta has been subject to three excessive deficit procedures:
(i) The first was launched by the Council decision of 7 July 2004 and was abrogated by the Council on 5 June 2007.
(ii) The second was launched on 7 July 2009 and abrogated on 4 December 2012, following a one-year extension, to 2011, of the deadline for correcting the excessive deficit on account of unexpected adverse economic events with major unfavourable consequences for the government finances that occurred in 2010.
(iii) Finally, the third one was launched by the Council decision of 21 July 2013, with a deadline to correct the excess deficit in 2014.
Earlier this month, Finance Minister Edward Scicluna welcomed the European Commission’s revised assessment of its draft budgetary plans presented with other euro area countries.
Prof. Scicluna, following a meeting of the euro finance ministers in Brussels, also confirmed that Malta’s reduction in the debt ratio planned for 2014 had been achieved.
“We are confident that soon we will be able to report the same for our fiscal targets. We therefore look forward to an abrogation of the excessive deficit procedure,” he said.
Scicluna said that Malta remained committed to undertake further structural reforms in 2015
“Malta is ready to undertake the necessary structural effort required in line with the requirements of the Fiscal Responsibility Act and the requirements of the Stability and Growth Pact. The reforms are bearing fruit, and each quarter over the last two years the rate of economic growth has been accelerating.”
Addressing parliament on Monday, Prime Minister Joseph Muscat expressed confidence that the Labour government would meet its deficit target and see Malta removed from the excessive deficit procedure He said, that the government had honoured its promise to reduce deficit to 2.1% and further reductions were planned for 2015.
Speaking last November, Finance Minister Edward Scicluna said that he was confident that the European Commission would drop the excessive deficit procedure for Malta early this year, once government finance figures for 2014 are out.
Speaking during a public consultation meeting in Valletta, Prof. Scicluna argued that the Commission was still wary of Malta's financial plans since the country's financial estimates for 2012 had been off target, leading it to be placed under an excessive deficit procedure a few months after this had been lifted in November 2012.
But he said that in 2013 and this year, the deficit has been reduced below the European Commission's own forecasts. He noted that last year, the government deficit amounted to 2.7% of the GDP, even though the Commission had projected a 3.7% deficit. This year, the Commission estimates a deficit of 2.5%, but the minister assured that the government's 2.1% target would be met.
The government's deficit target for 2015 is also lower than the Commission's estimate of 2.6%, at 1.6% of the GDP.