Malta secures €2.25 billion in EU budget and coronavirus recovery funds

Malta has received its largest ever EU funds allocation, €2.25 billion, for the financial period of 2021-2027.

Prime Minister Robert Abela described the agreement as an exceptional result, noting its significance when taking into account the UK’s withdrawal from the Union – which resulted in a €10 billion hole for the EU budget.

Abela negotiated a package worth €2.25 billion that includes €1.923 billion from the EU’s budget – the multiannual financial framework – as well as €327 million from the newly established recovery package known as Next Generation EU. This amount excludes the loan element in the same package.

The withdrawal of the United Kingdom from the European Union after almost 50 years will lead to a loss of €75 billion to the Union budget during the next seven years.

Furthermore, Malta’s economic growth means that its GDP per capita compared to the EU average has improved remarkably over the last seven years, suggesting it should have obtained less funds than last time.

Abela said he had told his counterparts that Malta had unique challenges that are different from those of other member states, and that it should not be penalised for its efforts in recent years to keep unemployment low.

“Despite Malta’s strong economic performance in recent years, this excellent package means that Malta’s net balance from the EU budget will also remain significantly positive for the coming years,” Abela said of the own resources Malta will have to pay.

 The deal means Malta has secured a total of €842 million in funds under the core Cohesion Policy. This amount, that does not include a further €92 million additional  funds for ReactEU (Cohesion Policy) from the recovery package, is at least €66 million more than what Malta obtained in February 2013 for the 2014-2020 Cohesion Policy. For agriculture, Malta obtained €191 million, or €53 million (38%) more than in 2014-2020. In total, under the traditional EU policies of Cohesion Policy and Agriculture, which account for around 60% of the total EU Budget, Malta obtained €1.125 billion, compared to €793 million that it would have obtained under the Commission’s proposal of 2018.

A minimum of 10% of the allocation under Cohesion Policy and Agriculture will be earmarked for Gozo, ensuring the island receives more funds overall than it currently has ringfenced under the 2014-2020 financing period.

 Other key instruments and programmes for Malta include Erasmus+ funds, migration, borders and security funds, and environmental programmes. Overall, the indicative allocation which Malta will receive under the 2021-2027 MFF is estimated to be €1.923 billion. This not only compares well with the deal of February 2013 for 2014-2020 but is actually €795 million higher.

Charles Michel press conference

“We did it!” - European Council president Charles Michel said at a press conference that started before 6am on Tuesday morning, after EU leaders agreed on a plan to jointly borrow €750 billion to respond to the coronavirus pandemic.  

After four days of tough negotiations, the EU’s recovery fund will be composed of €390 billion in grants and €360 billion in loans, attached to a new €1.074 trillion seven-year budget, the Multiannual Financial Framework (MFF), on which heads of state and government also reached unanimous agreement — bringing the total financial package to €1.82 trillion.

Michel heralded the agreement with a one-word tweet: “Deal!” he wrote.

He later told the press, “Europe is strong. Europe is united!... We have demonstrated that the magic of the European project works because when we think that it is impossible there is a spring in our step thanks to respect and cooperation.”

Malta prime minister Robert Abela posted on Facebook that this package would see Malta obtaining its biggest ever disbursement of EU funds for the next seven years.

Despite a pandemic that has killed 135,000 people around the bloc and shut down economies, spending on health was reduced in the final deal.  

Talks on the MFF had to contend with the absence of the UK, which left the financial framework with a €10 billion hole.  

France and Germany originally proposed a €500 billion debt-for-grants programme back in May, which the European Commission adopted, and added a €250 billion loan programme. Giuseppe Conte, the prime minister of Italy which has been hit particularly hard by the crisis, said it was “a historic moment for Europe.”  

But countries, mainly the self-declared Frugal Four of Austria, Denmark, the Netherlands and Sweden, strongly opposed the idea of taking on debt to issue recovery grants.  

The least supportive of the deal was Netherlands PM Mark Rutte, who managed to win agreement over a governance model for the deal, whereby governments can trigger a stop on disbursements if a government has not fulfilled reform proposals.  

Rutte wanted all spending plans by EU members states from the recovery package to be agreed by all other member states.