Despite the message being conveyed by almost every other section of the media, Malta has not emerged from the European Commission’s latest round of Excessive Deficit Procedures scot-free.

Far from it, and the declarations that the Commission will not be levelling excessive deficit procedures against Malta are categorically false. The procedure has, in fact, already begun.

The European Commission on Wednesday published two documents assessing the current state and the future of Malta’s public finances.

One was an assessment of the updated stability and convergence programme submitted by Malta to the European Commission in December.

The second, and far more important within this context, was the Commission document assessing the reasons why Malta surpassed the EU’s Growth and Stability Pact obligations last year.

Unfortunately, most of the local media appears to have only read the assessment document and ignored, possibly out of pure negligence or perhaps for darker motives, the excessive deficit report.

As such, it missed out on the crucial recommendation that Malta’s public finances should be subjected to “enhanced surveillance under the excessive deficit procedure”. The same document also spells out in black and white that “the Commission has decided to initiate the excessive deficit procedure for Malta with the adoption of this report”.

As such, the mere fact that the report was drawn up, adopted and published means that the excessive deficit procedure against Malta has in actual fact been initiated. Secondly, and more telling, is the Commission’s very clear recommendation in the report for an enhanced surveillance of Malta’s public finances.

It states in its excessive deficit report on Malta that, “the projected weakening of economic growth and the implementation of measures to support the economy increase the need to undertake enhanced surveillance under the EDP.”

The matter is, however, far from finalised and the exact type of “enhanced surveillance” the Commission will apply to Malta’s finances is still to be determined through a very specific process.

The EDP report on Malta will now go to the Commission’s Economic and Financial Committee, which will formulate its own opinion within two weeks on whether to recommend implementing the excessive deficit procedure against Malta.

After that, the Commission will make its final decision on 25 March on whether to recommend to EU finance ministers the existence of an excessive deficit and, if found to be breaching conditions, it will recommend a deadline for Malta to correct the deficit.

On the brighter side, the Commission has also advised that in determining the “next steps” against Malta as per the excessive deficit procedure, it should also be considered that Malta’s 2008 deficit was very close to the three per cent threshold and that it has been judged to be of a temporary measure.

The government estimates the country’s 2008 deficit at 3.3 per cent, while the European Commission estimates the figure at 3.5 per cent. At any rate, Malta is in breach of the three per cent threshold and as such the procedure automatically kicked in.

While Malta’s public debt level, the second criteriion, is still to drop below the 60 per cent threshold, the Commission in its report noted that it sees the ratio “diminishing sufficiently” at a “satisfactory pace” and as such fulfilled the second criterion.

But not so for the deficit, although the Commission could very well have overlooked Malta’s transgression of between 0.3 and 0.5 per cent of the EU’s deficit threshold if it saw the excess as purely temporary and as presenting no real threat to the country’s coffers, as it has consistently done in the case of the public debt.

Still, no other local media picked up on the Commission’s real intentions for Malta’s finances and instead, again possibly out of pure negligence, relied solely on the Commission’s programme assessment for its news.

Moreover, on the day the Commission was to publish its report, another newspaper ran a prominent story declaring that Brussels is to excuse Malta over the deficit. It must, however, be noted that such attempts to downplay, completely ignore the real situation or to precondition the news before it is released is a far cry from what the public deserves from the media.

True, Malta’s financial system has until now appeared robust, indeed conservative enough to weather the storm so far, as acknowledged by the EC, but the threats of the European and global recession bringing more serious turmoil to Malta’s shores is a very clear and present danger.

The danger should not be ignored nor downplayed. All cards, rather, should be put on the table face up so that if the worst does happen, at least the population would have been primed for the situation at least to a certain extent.