Council closes excessive deficit procedure for Malta

Brussels, 6-12-2012 — / — The Council today¹ adopted a decision closing the excessive deficit procedures for Malta, confirming that it has reduced its deficit below 3% of GDP, the EU’s reference value for government deficits. The decision² abrogates the decision that the Council took in July 2009 on the existence of an excessive deficit in Malta³ after its general government deficit reached 4.7% of GDP in 2008.

The Council had initially called for the deficit to be corrected in 2010. However, in February 2010, it extended the deadline for correction by one year in the light of a sharperthan-expected deterioration in Malta’s economy. Setting 2011 as the new target year for correcting the deficit, the Council called on Malta to achieve a 3.9% deficit in 2010 and to ensure a ¾ % of GDP fiscal effort in 2011.

Malta reduced its general government deficit to 3.6% of GDP in 2010 and to 2.7% in 2011. The Commission projects the deficit to fall further to 2.6% of GDP in 2012, mainly thanks to revenue-increasing measures that are mostly of a one-off nature. Under a no-policychange scenario, the general government deficit would widen to 2.9% of GDP in 2013 before narrowing again, to 2.6% of GDP, in 2014, thus remaining below the 3% of GDP reference value over the forecast horizon. Budget consolidation measures are however contained in Malta’s 2013 budget, which was adopted after the cut-off date for the Commission’s autumn economic forecast.

The Council concluded that Malta’s excessive deficit has been corrected.
¹The decision was taken at a meeting of the Economic and Financial Affairs Council.
²Adopted under article 126(12) of the Treaty on the Functioning of the European Union.
³Under article 126(6) of the treaty.

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