The IMF 2015 Article IV Mission, which has just completed a review of the Maltese economy and its finances, has concluded that the strong growth of the economy has been “helped by policy initiatives.”
The IMF is also positive about the economic and fiscal prospects for the coming years. It expects economic growth to remain strong, driven initially by domestic demand supported by, “energy related infrastructure projects, increasing female labour force participation and further reduction in income taxes.” In the medium term, the IMF expects growth to be fuelled by a gradual recovery in external demand. The IMF also considers that upside and downside risks are evenly balanced.
PRESS RELEASE ISSUED BY THE MINISTRY FOR FINANCE
On the fiscal front, the IMF notes that the authorities’ proposed pace of fiscal consolidation for 2016-18 is appropriate. Indeed, it acknowledges the success of the spending review on social security as helpful in containing expenditure growth. It expects similar spending reviews in other areas of the public sector to be as helpful.
The IMF also notes that the Fiscal Council, recently set-up by Government, has helped in increasing fiscal transparency. It further notes that the ongoing restructuring of state owned enterprises including Enemalta and Airmalta is critical in containing fiscal risks.
The IMF statement supports the pension measures introduced in the 2016 budget, noting that the Government is appropriately addressing adequacy and sustainability. It further states that ongoing efforts to increase the efficiency of health care spending should help contain age related spending growth and support the pension reform.
The Minister for Finance is pleased to note that the IMF acknowledges the Government’s reform priorities, which include increasing the female participation rate, reducing income tax rates, setting higher goals through our education strategy, reforming the judicial system and improving access to credit.
Commenting on the IMF mission’s concluding statement, the Minister for Finance Edward Scicluna said: “The IMF concluding statement gives the Government the assurance that its economic and financial policies are well suited and are having the desired effects.”
– Monday, 16th November, 2015