On Tuesday, the Economic and Financial Affairs Council (ECOFIN) in Brussels adopted a final decision to close Malta’s excessive deficit procedure, reflecting the government’s sound and credible fiscal policies over the past few years as well as the country’s solid economic outlook, the DOI announced.

Action against Malta was initiated in July 2009, following a 4.7% deficit reported in 2008, above the 3% EU threshold.

Although originally Malta was given until the end of 2010 to put its house in order, Malta was allowed another year due to the sharper-than-expected deterioration of the economy because of the global economic downturn.

Following various measures taken by the government, the deficit was reduced to 2.7% in 2011 and is expected to decline further to 2.3% by the end of this year.

In its recommendation to the Council, the Commission said it was expecting Malta’s deficit to remain below the 3% of GDP reference value over the forecast horizon – the end of 2014.

According to last week’s Budget estimates, the deficit should fall to 1.7% next year.

The meeting discussed a number of ongoing legislative proposals aimed at strengthening the economic and financial architecture of the European Union.

Finance Ministers exchanged views on the proposal for establishing a Single Supervisory Mechanism for the oversight of credit institutions, consisting of two proposed regulations: one would give certain supervisory tasks to the European Central Bank, while the other would modify the mandate of the European Banking Authority.

Minister Tonio Fenech, who represented Malta at the meeting, emphasised that small member states should retain adequate voting rights in the EBA’s structure and supported the Commission proposal to maintain the voting structure as it currently stands. Turning to the ECB Regulation, Malta stressed that the voting modalities within the Supervisory Board should be based on a one member, one vote system as is the current situation in the ECB Governing Council.

Ministers also discussed the pressing need to bolster the European Union’s economic and financial architecture. In this respect, the meeting addressed a few outstanding issues in reaching an agreement with the European Parliament on two draft regulations (known as the “two-pack”) aimed at strengthening economic governance in the euro zone.

The “two-pack” builds on a previous set of economic governance measures, known as the “six-pack”, which were adopted in November 2011. The two regulations aim at enhancing the budgetary and economic responsibility of member states, especially those which are under the excessive deficit procedure and experiencing severe financial disturbance.

The meeting also addressed developments on a number of other issues, including a political agreement which was reached with the European Parliament on proposals amending the EU’s rules on credit rating agencies.

Finally, the Cyprus Presidency of the Council of the European Union announced that the European Parliament’s Committee on Budgets had recommended a vote in favour of the package deal on the annual general budget of the European Union for 2013 during a meeting which was running in parallel to the ECOFIN Council.

This recommendation confirms that a political agreement on the package deal has been brokered between the Council and European Parliament following the publication of a new draft budget from the Commission on 23 November. Included in the package is the agreement to also cover for the shortfalls in the 2012 appropriations that had been identified inter alia in the Erasmus, Cohesion Policy and Rural Development programmes.

The package will now be formally adopted by the two arms of the budgetary authority in the coming days with the final step taking place at the European Parliament’s Plenary Session of 10-13 December.

As is customary, the ECOFIN Council meeting was preceded on 3 December by a meeting of the Eurogroup which took stock of the situation in the euro zone.

Mr Fenech was accompanied by Malta’s Permanent Representative to the European Union, Ambassador Marlene Bonnici, and the Permanent Secretary in the Ministry of Finance, the Economy and Investment, Alfred Camilleri.