Finance Minister Scicluna welcomes IMF 2013 conclusions
The Ministry for Finance welcomes the International Monetary Fund (IMF) 2013 Mission’s Concluding Statement regarding Malta (published Wednesday 15 May 2013), which confirms the soundness of Malta’s financial sector, further dispelling speculation regarding alleged similarities between Malta’s banking sector and those of ailing member states.
The IMF’s conclusions join other positive appraisals published in recent days by other well-established external observer entities such as credit rating agencies Standard & Poor’s, Fitch, Bloomberg, Namura, and the European Commission. Together, these conclusions represent a credible endorsement of the robustness and resilience of the Maltese financial sector by several respected and established external observer entities at a time of widespread economic uncertainty in Europe.
The Finance Ministry especially notes the IMF’s conclusion that “the risks of the Maltese banking sector are contained given that the large international banking segment has limited balance sheet exposures to the Maltese economy and negligible contingent claims on the depositor compensation scheme.” The Finance Ministry also notes the IMF’s recognition that, despite the turbulence in the Euro area, the performance of Maltese banks was satisfactory and, that domestic banks are adequately capitalised, liquid, profitable and, well-positioned to transition into the Basel III regime.
Malta’s situation, the IMF itself notes, is in contrast to many European countries, in view of how bank deposits to the private sector continued to increase. The Finance Ministry also agrees with the IMF’s remark that the deficit widened to 3.3% of GDP in 2012 due to the election cycle.
Government’s decision to revise the 2013 national deficit forecast upwards by 1 percentage point – from the previous administration’s 1.7% deficit forecast – to 2.7% was a reflection of this fiscal slippage which continued in the first quarter of this year, and represents a clear sign of this Government’s commitment towards recognising the true situation of the public finances, and its willingness to address it responsibly and decisively.
In this regard, the Government remains committed towards ensuring that the deficit returns to below the 3% threshold for 2013 and, towards steering the country’s finances towards a sustainable balanced budget in a gradual and prudent manner in order to maintain and presence the economy’s existing macroeconomic stability. It also remains committed to job creation by further economic growth potential. The Finance Ministry also welcomes the IMF’s support of the Government’s commitment to reduce energy costs for Maltese and Gozitan families and businesses – currently among the highest in the EU – as well as the IMF’s appreciation of Malta’s need to diversify its energy resources so as to address and reduce the country’s dependence on oil as an energy resource.