Unnoticed by most, including the government and its ministry, Malta has registered a small but significant step forward in its tackling of the Excessive Deficit Procedure in the Eurogroup.

According to a European Commission statement on 28 November (Commission Opinion on the 2015 Draft Budgetary Plans), Malta was classified among the countries with Plans at risk of non-compliance with the country's obligations under the Stability and Growth Pact, together with Austria, Belgium, France, Italy, Spain, and Portugal.

The Commission said with regards to Malta: "The Commission is of the opinion that the Draft Budgetary Plan of Malta is at risk of non-compliance with the provisions of the SGP.

"Malta is currently under the corrective arm, but could become subject to the preventive arm from 2015 in case a timely and sustainable correction is achieved.

"According to the Commission's forecast, the structural effort in 2014 is far from what was recommended by the Council in the EDP recommendation, highlighting the risk that the correction of the excessive deficit may not be achieved, owing to the apparent lack of a sufficient effort to support it.

"Also, based on the Commission's forecast, compliance with the debt rule falls slightly short in 2014.

"Finally, a significant deviation from the adjustment path towards the MTO is to be expected in 2015 based on the Commissions forecast, according to both the structural balance and the expenditure benchmark, unlike in the Draft Budgetary Plan. '

"The Commission therefore invites the authorities to take the necessary measures within the national budgetary process to ensure that the 2015 budget will be compliant with the SGP.

"The Commission acknowledges that Malta has made some progress with regard to the structural part of the fiscal recommendations issued by the Council in the context of the 2014 European Semester.

"However , it invites the authorities to accelerate progress on the planned efforts to improve the financial sustainability of the healthcare system, to ensure that further pension reform measures are put in place and to ensure that the efforts to improve tax compliance and fight tax evasion yield the expected results."

By last Monday, the situation had changed: Malta, along with Austria, Belgium, and Italy were said to be under the Preventive arm, which is explained like this: "Those member states whose plans are at risk of non-compliance with the rules under the Preventive arm should take, in a timely manner, additional measures as appropriate to address the risks identified by the Commission as regards an appropriate convergence towards the MTO and the respect of the debt rule.""

With regards to Malta, the Eurogroup said: "We agree with the Commission's assessment that there is a risk for a significant deviation from the adjustment path towards the Medium Term Objective in 2015, which is required once a timely and sustainable correction of the excessive deficit in 2014 is ensured.

"We note that according to the latest Commission assessment, Malta's structural fiscal effort in 2015 will be -0.2% of GDP, which is based on the no-policy change assumption and does not incorporate the consolidation measures in the 2015 measures, whereas 0.6% of GDP is required under the preventive arm. On that basis, additional measures would be needed to allow for an improvement of the structural effort in order to comply with the rules of the SGP.

"We welcome the commitments of Malta to implement the measures necessary to ensure that the 2015 budget will be compliant with the rules of the preventive arm of the SGP.""

The Eurogroup then put France, Portugal and Spain as the Member States under the Corrective arm.

To put this in a simple laymen's terms: the Member States under the Corrective arm are the really bad boys who may be fined for their infringement, while the ones under the Preventive arm are the ones, who, while in infringement, are so to a rather lesser extent. But they are still under the Excessive Deficit Procedure.

The head of the Eurogroup, Jeroen Dijsselbloem, speaking at the conclusion of the Eurogroup meeting in Brussels on 8 December, said: "There are seven Member States of which the compliance with the Pact is at risk: 4 under the preventive arm of the Pact (Malta, Austria, Belgium and Italy) and 3 under the corrective arm (France, Portugal and Spain). For these countries we discussed the Commission assessment of fiscal effort and recalled the fiscal targets applicable under the Stability and Growth Pact. The Commission assessment for these countries shows there is a gap between what us planned and what is required .

"Today we welcome the commitments made by all seven of these countries in order to comply with the rules of the Stability and Growth Pact.

"Those member states whose plans are at risk of non-compliance with the rules under the Preventive arm (thus including Malta) should take, in a timely manner, additional measures as appropriate to address the risks identified by the Commission as regards appropriate convergence towards the MTO and the respect of the debt rule.

"The Eurogroup will assess progress in March based on follow-up assessments from the Commission, which has announced its intention to re-examine the position of France, Italy and Belgium under the Stability and Growth Pact."