Following the submission of data by the Maltese authorities showing a deficit of 4.7% of GDP in 2008, the EU Commission adopted on 13 May a report under Article 104(3) of the Treaty as a first step in the excessive deficit procedure. The report concluded that neither the deficit nor the debt criterion in the Treaty is fulfilled.

The Commission has recommended to the Council that Malta puts an end to the excessive deficit situation by 2010 in a credible and sustainable manner by rigorously implementing the budgetary measures planned for 2009 while avoiding any further deterioration in public finances. For 2010, new consolidation measures are called for.

The recommendation also invites the Maltese authorities to ensure that budgetary consolidation towards the medium-term objective of a balanced budgetary position in structural terms is sustained after the excessive deficit has been corrected. To this end, the Maltese authorities are invited to spell out the measures necessary to achieve a lasting consolidation and to strengthen the medium-term focus of the budgetary framework.

The Commissions findings are based on the April notifications of the fiscal outcomes for 2008, the Commission has concluded that Lithuania, Malta, Poland and Romania are running excessive deficits in the sense of Article 104.7 of the EU Treaty and recommends deadlines for their correction.

The Ecofin Council is expected to discuss the recommendations at the upcoming July gathering. At that point, the Member States concerned will have six months to define and start implementing measures to correct the excessive deficit.

” National budgetary positions in the EU and elsewhere have deteriorated considerably in the last year and will deteriorate even more this year on account of the recession and of the stimulus packages appropriately put in place, when room for manoeuvre exists, to limit the negative impact on activity and employment. To limit the costs of the debt for generations present and future, it is crucial that governments devise an adjustment path whereby they commit to correct public deficits from the moment the economy starts to recover, which is expected to happen gradually starting 2010. The Stability and Growth Pact provides the framework for this exit strategy and a return to sound and sustainable public finances in the medium-to-long term,” said Economic and Monetary Affairs Commissioner Joaquín Almunia.

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