The Ministry for Finance notes the European Commission’s Opinion on the Draft Budgetary Plan of Malta, the Annual Growth Survey, and the Alert Mechanism Report, which were issued today.
The Commission Opinion concludes that the Government’s draft budgetary plan, as submitted on the 15th October, appears plausible for 2014, while optimistic for 2015. No changes are being requested to be made to Malta’s budget for 2015.
PRESS STATEMENT BY THE MINISTRY FOR FINANCE
Furthermore, the Alert Mechanism Report concludes that, on the basis of the economic reading of the scoreboard, the Commission is of the view that the macroeconomic challenges of a group of countries which includes Malta “do not represent [macroeconomic] imbalances.”
It must be pointed out that the €28 million euro worth of fiscal consolidation measures announced in the budget were not formally taken into consideration by the European Commission in this evaluation.
This is because the deadline for the submission of the Draft Plan to the Commission came well before the announcement of the budget in the Maltese Parliament, and so details could not be given beforehand so as to avoid market instabilities. This is an outstanding issue with the Commission in view of our national parliamentary programme, and which the government would like to address for next year.
In spite of this significant omission, dictated by the calendar, Malta was still not placed in the category of Member States whose position will be examined once again in early March 2015.
Indeed, in its reaction to Malta’s Draft Budget 2015, published on Thursday 17th November 2014, the European Commission acknowledges the progress registered by the Maltese Government with regard to the Commission’s fiscal recommendations issued last year.
In its opinion, the Commission confirms the reduction in the deficit ratio to 2.7% in 2014 in spite of the Commission’s forecast of 3.4%. Its 2.7% forecast for this year contrasts with the government’s own estimate of 2.1%.
As for the Commission’s emphasis on the need for further reforms on tax evasion, health care and pension reform, the Government is making progress on all fronts, with, for instance, the report on pension to be submitted to the Cabinet in the coming weeks.
The Ministry acknowledges the risks pointed out by NAO report, as well as the Commission, in relation to the implementation of the large investment projects, developments in expenditure and the interlinkages between the domestic economy and external macroeconomic environment, and is actively following them.
On its part, the Commission acknowledges Malta’s progress with the implementation of fiscal-structural reforms, and states that ‘Malta has adopted the reform of the fiscal framework, has rolled out a number of already reported measures to improve tax compliance and fight tax evasion, and finally is in the process of approving a bill providing for the set-up of third pillar pension scheme with a view to improving pension adequacy.’
– 28th November 2014