IMF confirms soundness of Maltese banking sector - Scicluna

Scicluna said the report further dispelled speculation of the alleged similarities between Malta's banking sector and those of ailing member states, like Cyrpus.

"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," Scicluna said.

The finance minister set much store in highlighting 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.

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. Scicluna 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," Scicluna said.

The minister said he was committed to taking down the deficit to below 3% in 2013 and furthering job creation through economic growth. Scicluna also welcomed 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.