EU Council adopts excessive deficit procedure against Malta and other member states

Europe’s heads of state have adopted the Commission’s excessive deficit procedures for Malta and six other member states, calling on the respective governments to return spending levels under EU limits.

The EU Council adopted decisions establishing the existence of excessive deficits for Belgium, France, Italy, Hungary, Malta, Poland and Slovakia, and in addition, Romania had not yet taken effective action to correct its deficit since 2020.

Malta had a deficit of 4.9% in 2023 and government debt at 50.4% of GDP. The highest deficit was Italy’s with 7.4%.

Member states will have to bring back their deficit to at least 3% of their gross domestic product and national debt not exceeding 60% of GDP.

The Commission said Maltas excess deficit in 20203 was not exceptional, resulting neither from an unusual event nor from a severe economic downturn. Malta is planned to reach a deficit of 4.3% of GDP in 2024.

The EDP is aimed at maintaining discipline in governments’ budgets, and low government debt, by putting member states under enhanced scrutiny with recommendations for them to take effective action to correct the deficit.

The recommendations from the EC may contain a corrective budgetary path, expressed in numerical terms, and a deadline.

This year, exceptionally, the timing of recommendations to member states in excessive deficit procedure will be aligned with the provisions of the EU’s reformed economic governance framework.

Under the new rules, member states have to prepare medium-term plans in the autumn, setting out spending plans and priority reforms and investments for the next four to seven years.