EU says Malta has taken measures to address deficit, debt levels

Malta was considered to be taking steps to address its deficit and debt levels, but remains under an excessive deficit procedure, the European Commission said today.

Eurozone finance ministers considered each other's draft national budgets for the first time today Friday, under a new procedure designed to uncover financial trouble in the crisis-laden eurozone.

The Stability and Growth Pact, which entered into force nearly 15 years ago, requires EU member states to bring their deficits down to 3 per cent of gross domestic product (GDP) and their debt down to 60 per cent of GDP.

The EC says Malta will see its deficit rise above the 3% level in 2013 and 2014, but Malta insists it will fall to 2.7% this year.

 Malta was said to have taken additional measures and addressed the risk of rising deficit and debt levels in its 2014 budget.

"All member states must continue to pursue their fiscal objectives... no draft budgetary plan was found to be non-complaint with the SGP," European Commissioner Olli Rehn said. "All member states are taking seriously their commitment to sound public finances."

The eurozone member states, dubbed the Eurogroup, said in a statement that the euro area was making its way out of the crisis as the signs of economic recovery are becoming more visible.

"We are convinced that the closer coordination of member states' fiscal policies in the framework of this new exercise will significantly contribute to the strength and cohesion of the euro area," the "We engaged fully in this new coordination exercise by having an in-depth and frank debate on the draft budgetary plans for 2014 and the overall situation in the euro area, allowing scrutiny by euro-area peers."

All eurozone countries, except the already closely-monitored bailout recipients had to send their draft budgets to Brussels in October.

The EC has warned five countries they are at risk of breaching EU economic rules next year, including Italy and Spain - the eurozone's third- and fourth-largest economies.

Malta, Luxembourg and Finland were the other countries taken to task, while the commission found that Germany and Estonia were the only countries on track to fully comply with the bloc's debt and deficit targets.

Controversially, the EC did not immediately grant Italy a budget exemption that would have allowed for growth-enhancing investments.