Malta’s draft budget was given the green light by the European Commission earlier this week.
The European Commission is tasked with looking into member states’ budgets to ensure that they stick to the bloc’s strict expenditure rules, among other factors.
The Commission assesses the draft budgetary plans of the euro-area Member states which summarise the draft budgets that governments submit to national parliaments. It then provides an opinion on each plan and ranks them in three categories according to their compliance with the requirements of the SGP 2020: ‘Compliant’ being the best category, or otherwise ‘Broadly Compliant’ and ‘Risk of Non-Compliance’.
According to the Commission 2019 autumn forecast, the Maltese economy is expected to grow by 5 per cent in 2019 and 4.2 per cent in 2020, down from 6.8 per cent in 2018.
The Commission said it was of the opinion that Malta has made limited progress with regard to the structural part of the fiscal recommendations contained in the Council Recommendation of 9 July 2019 in the context of the European Semester
It thus invited the relevant authorities to make progress in this aspect
Overall, the Commission is of the opinion that the Draft Budgetary Plan of Malta is compliant with the provisions of the Stability and Growth Pact and the Commission invited the authorities to implement the 2020 budget.
However, it noted that fiscal surpluses are heavily driven by Individual Investment Programme revenue, the development of which is difficult to predict. In addition, although the expenditure benchmark pillar does not point to a risk of compliance for 2019 and 2020, based on the Commission 2019 autumn forecast, the net public expenditure annual growth corrected for one-offs is expected to be one of the highest in the euro area.
For this reason, the Commission recommended that expenditure developments are monitored carefully, especially in light of possible future risks to the robustness of revenues.
In a statement, Finance Minister Edward Scicluna said: “I am pleased to note that Malta was amongst the nine euro-area Member States, including Germany, Ireland, Luxembourg, the Netherlands and Austria, where the Budget for 2020 was found to be ‘compliant’ and thus given the green light by the Commission. We look forward to the final Budget approval by the Council of the European Union in early December,” stated Minister for Finance Edward Scicluna.
Malta is also expected to be amongst the seven euro-area Member States expected to be above their medium-term budgetary objectives in 2019, and above or at par in 2020.
This positive result from the European Commission follows that received a few weeks earlier from the same Commission, wherein Malta was forecasted to record the highest economic growth rates in the EU for the coming two years.
