Gonzi clinches €1.12 billion in EU funds under new budget

Hard-fought negotiations in Brussels have seen Prime Minister Lawrence Gonzi obtaining €1.128 billion in funds for Malta in the next financial period covering the EU's budgets from 2014 to 2020.

The funds include €20 million more in directly-allocated funds of cohesion and agriculture funds than Malta would have obtained had it remained a 'less developed' country under Objective 1 funding, the OPM said in a statement.

Heading into yesterday's discussions, Gonzi stressed Malta's consistent position that it should not be penalised for its economic progress after just one full financing period (2007-2013).

"Today's deal in the European Council means that Malta has secured a total of €914 million in funds under cohesion and agriculture. Had Malta retained its convergence (Objective 1) status under the 2014-2020 financial period, it would have received €892 million under these two headings. The deal will therefore actually be a slight increase (€22 million) in these policy areas than would have been the case had it remained an Objective 1 region. Moreover, there is a recognition of the permanent handicaps of island member states in the conclusions, in line with the Lisbon Treaty," the OPM said in a statement.

The indicative overall funds which Malta will receive under the 2014-2020 framework estimated to be €1.128 billion, which compares well with the €1.115 billion Malta was allocated during the current 2007-2013 period.

It also sees an increase of €109 million for Malta over the original Commission proposal of June 2011 before this Commission proposal was cut by €85 billion overall in commitment appropriations. Malta is not only expected to benefit more in terms of allocations, but is also expected to pay less to the EU over the next seven years when compared to the Commission proposal.

It is estimated that Malta's net position, after its contribution to the EU budget, will be €627 million. This compares with an estimated €478 million net benefit under the original Commission proposal. 

"This agreement is a landmark result and a major success for Malta," Prime Minister Lawrence Gonzi said.

"The outcome was excellent for Malta in view of the various challenges facing the EU's economy, the overall budget decrease and the entrenched positions of other member states... it will remain a priority for the government to continue to facilitate and maximise the use of EU funds."

The government has decided that a good part of the additional allocation under agriculture will be earmarked for Gozo. "This will ensure that Gozo receives more funds than it currently has ring-fenced under the 2007-2013 financing period. For the 2014-2020 period, apart from the 10% under Cohesion Policy (€78 million), a further €32 million (23% of Malta's agricultural allocation) will be ring-fenced for Gozo to bring the minimum total allocation for Gozo (Cohesion and Agriculture) to €110 million," the OPM said.

In addition to the funds, Malta will benefit from a number of horizontal measures which include the extension of the period available for the implementation of committed projects from three to four years, allowing Malta more time to complete these projects, and ensuring that funds will not be lost; there was also the agreement to make non-reimbursable VAT on these projects eligible for funding.

"The deal is significant as it is juxtaposed against Europe's worst economic crisis in decades and a resulting substantial decrease of €33.6 billion in the overall commitment appropriations of the multiannual financial framework when compared to the current financial period (2007-2013).

"The result is all the more important as Malta's economic growth over the past few years means that it no longer qualifies for the highest level of benefits from the EU's Cohesion Policy funds and has been upgraded from being a less developed region to what is now known as a 'transition region'," the OPM said. 

The agreement is a result of over a year and a half of negotiations following the European Commission's original proposal in June 2011, on the basis of which Malta would have received a total of €715 million under Cohesion Policy and Agriculture funds. As negotiations proceeded, the Cyprus Presidency proposed a cut to the EU budget proposal which would have reduced Malta's allocation in these policies to €656 million.

Over the months, Gonzi held discussions with the President of the European Council, the President of the European Commission and fellow heads of government in Brussels, Malta and other capitals to explain the effects that such dramatic cuts would have on Malta.

The President of the European Council's proposal that emerged following the bilateral meeting held back in 22 November 2012 included an additional top-up of €200 million for Malta's cohesion policy allocation, bringing Malta's allocation to €879 million.

That summit however concluded without agreement.