The Maltese government is “fully committed” to bringing its budget deficit below the European Union’s ceiling this year, after the EU put Malta on notice for its excessive spending gap, Prime Minister Joseph Muscat said.
The European Commission, the EU’s executive arm, told Malta to reach a deficit target of 3.4 percent of gross domestic product this year and 2.7 percent in 2014, under the EU’s 3 percent ceiling. The 2012 deficit was 3.3 percent of GDP.
Being placed in a so-called excessive-deficit procedure by the Brussels-based commission strengthened the Maltese government’s resolve that “it will not miss the target,” Muscat said in an e-mailed statement after the EU decision.
The commission said that the “exposure to the real estate market of Malta’s core domestic banks needs to be closely monitored and relevant measures should be put in place.”
“While other banks operating from Malta have limited links with its domestic economy, they account for 790 percent of its GDP and therefore these should be strictly supervised to prevent the accumulation of imbalances,” the commission said.