The European Commission projects a sustained fall in both the deficit and debt ratios in its Winter Forecast, Minister for Finance Edward Scicluna said, "thus boding well for the upcoming Excessive Deficit Procedure decision".

The Finance Minister was commenting on the publication of the European Commission Winter Forecast 2015, published today, which acknowledges the Government's successes with regard to reining in and containing the deficit, while also reducing public debt.

"The Commission remarks that it is expecting that the budget deficit figures for Malta to continue decreasing, to reach rates below 2% in 2016, levels which have not been experienced over the last two decades," he said.

The Minister argued that the Commission also confirms that general government debt ratio will decrease to 68.6% of GDP in 2014, and is expected to decrease further to 68.0% in 2015, reaching 66.8% by 2016, "thus confirming its confidence in the Government's fiscal plan".

He added that the Commission has acknowledged Malta's "dynamic [economic] growth" and "low employment" in 2014, underpinned by "dynamic investment ... and favourable labour market developments". This amidst the sluggish economic recovery in the EU and the euro area, with annual GDP expected to increase by 1.3% and 0.8% respectively in 2014, he said. "The Commission also remarks that these positive developments will persist". 

"Contrary to the Opposition's claims that the local economy is being driven by public spending, the Commission said that 'private consumption is expected to continue showing strong growth in 2015-16'. This is based on a rise in disposable income 'due to falling energy prices and unemployment".

"Malta's labour market is projected to continue to perform well as, improvements in labour market activity of women is expected to continue driving employment dynamics. Job creation is forecast to remain robust at around 2% per annum, while unemployment is expected to remain below 6%".

The Commission expects the demand for credit to make a stronger recovery, "thanks to lower interest rates that could further boost the investment outlook," he explained. "Furthermore, the Commission also recognises that the ongoing energy reforms could improve the competitiveness of the corporate sector and lower costs for companies, which could result in higher than expected investment and exports".

Turning to exports, he said "Increased exports are also expected to be reflected in Malta's international trade position, where the Commission remarks that Malta's current account balance is projected to remain in surplus".