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Maltese report Maltese report
by Euro Reporter
2011-10-08 11:40:01
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Malta cannot afford to slip on deficit

The next budget has to strike a balance between fiscal consolidation and economic growth, paying particular attention to those people who are feeling the pressure, Finance Minister Tonio Fenech said yesterday. In view of the economic scenario affecting neighbouring countries, Malta could not afford to “slip” or fail to reach the target to reduce the deficit by six percentage points, from 2.8 per cent this year to 2.2 per cent next year, with the ultimate aim being to achieve a balanced budget.

“It would be a mistake if we took our sights off this target,” Mr Fenech warned businessmen at the first business breakfast organised as part of the Budget 2012 consultation process. He said Malta could not risk being perceived as other EU states in the eurozone if it wanted to continue attracting foreign investment. He said that Malta’s primary goal was to reduce Malta’s debt – which currently stood at 68 per cent of the gross domestic product – while not losing sight of economic growth. “At 68 per cent, Malta’s debt levels are still significantly lower than the EU average which stands at 85 per cent,” he said, adding that this did not mean that the country did not have to tackle this problem.

Mr. Fenech said the indications were good, with 2.2 per cent economic growth in the first quarter and 2.8 per cent growth in the second. This did not mean that the country could afford to sit on its laurels. Labour productivity in the first quarter, he said, increased by 2.4 per cent while the average in the EU was 1.1 per cent. In the first six months this year, exports increased by a staggering 54 per cent because production did not stop during the crisis. Malta was also still seeing interest in investment and it was important to keep the momentum going.

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Malta must focus on debt reduction


Finance Minister Tonio Fenech says Malta cannot risk being perceived as other EU states in the eurozone if it wants to attract foreign investment. Addressing a business breakfast as part of Budget 2012 consultation process, Finance Minister Tonio Fenech said Malta’s primary goal is to reduce Malta’s debt – currently standing at 68% of GDP – while increasing economic growth. “Malta’s debt levels are still significantly lower than the EU average (85%),” he said. “However, market instability will only be defeated through further improvement of debt levels.”

"Following recovery and return to growth, it is in our interest to return to financial sustainability," he added. “Financial sustainability is essential to continue attracting investment and further growth.” Fenech said that Malta’s main contributor for economic growth is direct foreign investment and that total foreign investment in 2010 reached €792.1 million, an increase of €250 million over the previous year: “Between 2008 and 2010 Malta Enterprise approved 99 new investments, despite the challenges on an international level. The momentum improved in 2011, where during the first half of the year, Malta Enterprise approved 23 projects with an investment of €49 million.”

Last year, 26 projects with a total investment of €49 million were approved. “The budget’s challenge is to reduce Malta’s deficit from 3% to 2%. To attract investment we should keep in mind that the message to send is where Malta stands in the crisis,” Fenech said. “We should not risk slipping in the same trap like the other countries did.”

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Malta has the highest decrease in retail trade in the EU


In August 2011 compared with July 2011, the volume of retail trade fell by 0.3% in the euro area (EA17) and by 0.2% in the EU27. In July retail trade rose by 0.2% and 0.1% respectively. In August 2011 compared with August 2010, the retail sales index decreased by 1.0% in the euro area and by 0.8% in the EU27. In August 2011, compared with August 2010, “Food, drinks and tobacco” fell by 0.2% in the euro area and by 0.5% in the EU27. The non food sector decreased by 1.3% and 0.7% respectively.

Among the Member States for which data are available, total retail trade fell in twelve and grew in nine. The highest decreases were observed in Malta (-8.8%), the figures showing no real change from those in September, when Malta had the highest decrease at -8.9%. Other member states, Romania (-6.3%), Spain and Portugal (both -4.6%), and the largest increases in Luxembourg (+11.7%), Lithuania (+10.1%) and Latvia (+7.4%).

In August 2011, compared with July 2011, “Food, drinks and tobacco” rose by 0.1% in the euro area and by 0.3% in the EU27. The non food sector decreased by 0.6% in both zones. Among the Member States for which data are available, total retail trade fell in twelve and grew in nine. The highest decreases were observed in Romania (-3.1%), Germany (-2.9%) and Finland (-2.2%), and the largest increases in Slovenia (+3.1%), Luxembourg (+2.8%) and Lithuania (+2.5%). Malta stood at -0.5%.



     
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