At the opening of a symposium entitled The Economic Monetary Union (EMU) and the new member states: some lessons for and from the developing world, the parliamentary secretary addressed monetary issues concerning Malta on the brink of its European Union accession.

Malta, together with the other nine accession countries, has been given the privilege of choosing when to adopt the euro, said Mr Fenech, rather than having to meet the Maastricht criteria before accession.

There are significant advantages to be derived from the adoption of the euro, he said. Malta’s industry will save on transaction costs and reduce exchange risks. It will also benefit from financial market integration, and price transparency will reduce relative price distortions and increase competition, he continued.

“We need to focus on the structural reform necessary to make our country more competitive,” said the parliamentary secretary. He spoke of reforms relating to labour mobility, wage flexibility and competitiveness within our domestic market.

Mr Fenech explained that the policy prescriptions in the Stability and Growth Pact may not be entirely suitable for a developing country where high exposure to external forces requires flexible responses. This, he explained, is because the process leading to the adoption of the euro may result in conflict between this flexibility and the need to commit to a set of pre-established criteria, such as those prescribed in the pact.

The growth and stability pact which underpins the EMU is based on the premise that discipline in the management of public finances is imperative for economic growth, said Mr Fenech. Sound macroeconomic management across all EU member states, in line with the Maastricht criteria, in turn guarantees the success of the EMU.

The symposium, held yesterday, was organised by the University of Malta in collaboration with the European Association of Development Research and Training Institutes.