During a meeting of the Economic and Financial Affairs Council held in Brussels earlier today, the Council adopted a legal text on VAT Reduced Rates which will enable Malta to continue applying a zero VAT rate on food and pharmaceuticals indefinitely. This legal text follows the political agreement reached at the Economic and Financial Affairs Council on the 10th of March 2009.

The Minister of Finance, the Economy and Investment Tonio Fenech stated that this decision now seals off an important chapter in Malta’s relations with the EU and confirms Government’s capability of negotiating at the highest levels to ensure the best possible deals for our country. Tonio Fenech expressed his satisfaction that Malta managed to obtain such an achievement that was beneficial to all and consequently avoided a hike in the price of such important consumer products, food and medicines.

Meanwhile, the international financial and economic crisis remained high on the agenda of EU Finance Ministers. The Ministers held an exchange of views on the economic and financial situation in the euro area and on recent financial market developments. Euro Area Ministers were also debriefed on the outcome of the recent G7 meeting in Washington, in particular with regard to the increase of International Monetary Fund (IMF) resources and the implications for the Euro Area.

The Council also discussed excise duties on tobacco products, with a view to modernise and simplify the existing EU rules and making them more transparent, whilst ensuring a higher level of public health protection by raising minimum excise duties on tobacco products.

During the meeting, the Commission presented its preliminary draft for the EU’s general budget for 2010. The Council had established its priorities for this budget at its meeting on the 10th of March 2009. These will be used by the incoming Swedish presidency as a mandate for negotiations with the European Parliament and the Commission later on this year.

The Council also adopted conclusions on the economic impact of the EU’s largest ever enlargement in May 2004, and on the challenges posed to the enlarged EU by the economic and financial crisis. The conclusions welcome the positive effects of enlargement both for the countries that joined the EU in 2004 and for those that were already members. Finally, the conclusions highlight the need for further work to ensure a sound macroeconomic underpinning and a coherent set of structural reforms in order to reap the full potential benefits of enlargement.

During the Eurogroup and Economic and Financial Affairs Council meetings Malta was represented by the Minister of Finance, the Economy and Investment, Mr. Tonio Fenech, and the Permanent Representative of Malta to the European Union, Mr Richard Cachia Caruana.

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