‘Government serious about fiscal discipline’, Fenech says as deficit goes down to 2.7%

Finance Minister Tonio Fenech has hailed data by the National Statistics Office which today registered the government's deficit at 2.7% of the gross domestic product - putting Malta below the 3% mark imposed by the Maastricht Treaty and improving original predictions by one-tenth of a percentage point.

"The European Commission's latest figures tally with Malta's government deficit projections, which in this case went above what we initially predicted," Fenech told the press.

"This sends an important message to investors, and shows Malta is taking its financial sustainability seriously."

Malta was one of five eurozone countries whose deficit fell under the 3% mark. Fenech pointed out the marked difference in contrast to the deficits experienced in neighbouring countries.

Malta's government debt however increased from 69% to 72% over the year, putting it well above Maastricht's suggested 60% of GDP.

Fenech said the increase in debt was tied to the Greek lending facility and other financial stability assistance that went to the Irish and the Portuguese under the European Financial Stability Facility.

Of this three per cent increase, 1.3% is related to these lending facilities, Fenech said, reinforcing the notion that within the EU framework, governments were committed to balanced budgets and the EFSF.

The target deficit for 2012 is 2.2%. "Having this kind of fiscal discipline, even through the EU's guidance, has allowed this country to reduce deficits and give investors peace of mind," Fenech said.

"Once Malta balances its book, national debt will also start decreasing as a percentage of gross domestic product," the minister said.

Fenech pointed out that the Opposition had taken every opportunity to comment that the government would never reach its targets. "Not only have we succeeded, but we have actually gone beyond. Our message is that this country is serious about improving the investment climate. The Opposition is misinterpreting the official data."

The general government deficit for 2011 is estimated at €173.9 million, or 2.7 per cent of GDP, while gross consolidated debt amounted to €4,600.3 million, or 72 per cent of GDP.

According to estimates released by the National Statistics Office, in 2011 general government deficit was estimated at €173.9 million, down from €227.7 million for 2010.

Positive adjustments included the time-adjusted cash transactions (€39.9 million) and the nonfinancial transactions in the treasury clearance fund (€24.4 million). On the other hand, the main negative adjustments were other accounts receivable and payable (-€17.7 million) and other financial transactions (-€7.4 million).