Updated convergence programme of Malta, 2006-2009 - Main contents
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official title
Council opinion of 27 February 2007 on the updated convergence programme of Malta, 2006-2009| Legal instrument | Opinion |
|---|---|
| Original proposal | SEC(2007)140  |
| CELEX number i | 32007A0329(03) |
| Document | 27-02-2007 |
|---|---|
| Publication in Official Journal | 29-03-2007; OJ C 72 p. 9-12 |
| End of validity | 31-12-9999 |
29.3.2007 |
EN |
Official Journal of the European Union |
C 72/9 |
COUNCIL OPINION
of 27 February 2007
on the updated convergence programme of Malta, 2006-2009
(2007/C 72/03)
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community,
Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies (1), and in particular Article 9(3) thereof,
Having regard to the recommendation of the Commission,
After consulting the Economic and Financial Committee,
HAS DELIVERED THIS OPINION:
(1) |
On 27 February 2007 the Council examined the updated convergence programme of Malta, which covers the period 2006 to 2009. |
(2) |
The macroeconomic scenario underlying the programme envisages that real GDP growth will hover around 3 % over the programme period. Assessed against currently available information, this scenario appears to be based on favourable growth assumptions for 2007 and markedly favourable ones thereafter, especially due to the optimistic medium-term evolution of the external sector. Less favourable net exports in the medium term than foreseen in the programme could heighten the external imbalance recorded in recent years. Inflation projections appear plausible. |
(3) |
For 2006, the general government deficit is estimated at 2,9 % of GDP in the Commission services' autumn 2006 forecast, against a target of 2,7 % of GDP set in the previous update of the convergence programme. The estimated outturn for 2006 in the new update (2,6 % of GDP) is below that projected in the Commission services' autumn 2006 forecast and seems plausible in the light of recent information on GDP growth and government finance cash data. |
(4) |
The budgetary strategy outlined in the update aims at reducing the deficit below the 3 % of GDP reference value in 2006 and at pursuing fiscal consolidation thereafter. The update foresees a gradual reduction in the general government deficit leading to a broadly balanced budget by 2009. With a projected decline in the interest burden, the primary surplus is expected to reach 3 % of GDP by 2009. The adjustment is to be achieved through a cut in the primary expenditure ratio by almost 5
percentage points of GDP, which more than offsets a decline in the revenue ratio by almost 3
percentage points of GDP. Despite the success in restraining overall spending, healthcare expenditure followed an upward trend in the past years. Lower recourse will be made to deficit-reducing one-off measures than in the recent past. The programme broadly confirms the planned nominal budgetary adjustment in the previous update against a much more favourable macroeconomic scenario. |
(5) |
The structural deficit (i.e. the cyclically-adjusted deficit net of one-off and other temporary measures) calculated according to the commonly agreed methodology is planned to improve from around 3 % of GDP in 2006 to
% of GDP at the end of the programme period. As in the previous update of the convergence programme, the medium-term objective (MTO) for the budgetary position presented in the programme is a balanced position in structural terms but the new programme does not aim to achieve the MTO within the programme period. As the MTO is more demanding than the minimum benchmark (estimated at a deficit of around 1
% of GDP), achieving it should fulfil the aim of providing a safety margin against the occurrence of an excessive deficit. The MTO lies within the range indicated for euro-area and ERM II Member States in the Stability and Growth Pact and the code of conduct and adequately reflects the debt ratio and average potential output growth in the long term. |
(6) |
The risks to the budgetary projections in the... |
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