SME Chamber

Council closes excessive deficit procedure for Malta

08 December 2012

The Council has adopted a decision
closing the excessive deficit procedures for Malta, confirming that it has
reduced its deficit below 3% of GDP, the EU's reference value for government
deficits. The decision abrogates the decision that
the Council took in July 2009 on the existence of an excessive deficit in Malta
after its general government deficit reached 4.7% of GDP in 2008.

The Council
had initially called for the deficit to be corrected in 2010. However, in
February 2010, it extended the deadline for correction by one year in the light
of a sharperthan-expected deterioration in Malta's economy. Setting 2011 as the
new target year for correcting the deficit, the Council called on Malta to achieve
a 3.9% deficit in 2010 and to ensure a ¾ % of GDP fiscal effort in 2011. Malta
reduced its general government deficit to 3.6% of GDP in 2010 and to 2.7% in
2011.

The Commission projects the deficit to
fall further to 2.6% of GDP in 2012, mainly thanks to revenue-increasing
measures that are mostly of a one-off nature. Under a no-policychange scenario,
the general government deficit would widen to 2.9% of GDP in 2013 before
narrowing again, to 2.6% of GDP, in 2014, thus remaining below the 3% of GDP reference
value over the forecast horizon. Budget consolidation measures are however
contained in Malta's 2013 budget, which was adopted after the cut-off date for
the Commission's autumn economic forecast. The Council concluded that Malta's
excessive deficit has been corrected.

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