IMF lauds Malta’s economic growth but warns of dependency on foreign workers while highlighting anti-money laundering deficiencies
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In a wide-ranging assessment of the Maltese economic and financial sector, the International Monetary Fund has praised Malta’s rapid economic growth, job creation and social cohesion. At the same time it highlighted a number of challenges which should be addressed in a timely manner by the authorities to ensure the sustainability of such growth in the medium to longer term.
In the conclusions of its annual mission to Malta, the IMF lauds the country’s efforts to reduce its debt burden and to attract more women and elderly workers to the employment market. It also highlights the banking’s sector capitalisation and liquidity, two key indicators of financial stability.
Reflecting the recent assessment published by the European Commission, the IMF noted that economic activity, although still above its long-term average, is moderating, and is increasingly dependent on domestic demand. The IMF pointed out that economic growth has largely relied on large inflows of foreign workers, which has the negative downside of putting pressure on housing, infrastructure and natural resources.
The IMF’s recommendations can be summarised in three categories. These include the need to ensure further fiscal stability by reducing dependency on the Individual Investor Programme and corporate taxation; the implementation of further reforms which encourage a higher labour force participation, foster innovation and improve access to affordable housing; and the strengthening of Malta’s AML framework, which if not tackled in a timely manner could damage the country’s attractiveness for investment and financial stability.
