This is the first time the European Commission has applied the new rules of the strengthened Stability and Growth Pact (SGP), which are part of the so-called "six-pack" on economic governance, which entered into force on 13 December 2011. The European Commission has reached a similar conclusion for Belgium, Cyprus and Poland, the other countries besides Malta that were at risk of not meeting their deadlines of 2011 or 2012 to correct their excessive deficit.
Olli Rehn, the European Commission Vice-President for Economic and Monetary Affairs and the Euro said: "This report shows that the six-pack is already delivering. It has given the European Commission teeth to act when countries fail to bring their deficits under control and reduce their debt. Fiscal discipline is crucial to reinforce confidence in our public finances. I stand by my word: I am determined to fully use this new powerful set of tools from Day One."
For Malta, Belgium, Cyprus, Hungary and Poland, the Commission's Autumn Forecast of 10 November 2011 showed that these countries were at clear risk of not meeting their obligations to correct their excessive deficits. The next day, Vice-President Rehn sent letters to the Finance Ministers concerned making clear that, in the absence of corrective measures, further steps under the EDP, with the possibility of prompting sanctions, would become unavoidable. All four countries have since taken measures that appear sufficient to ensure a sustainable correction of the excessive deficit.
Reacting to the news, finance minister Tonio Fenech told MaltaToday that the Commission's announcement was " positive news that confirms the appreciation of the Commission of the hard work and the prudent fiscal strategy that Malta is adopting to ensure further economic growth which is grounded on stability."
Fenech added that the Commissions projections put Malta with one of the lowest deficits among the EU 27. "Government is achieving these targets with serious focus on controlling public expenditure without the need to resort to austerity measures as has been the case in other countries," Fenech concluded.
On the other hand, the European Commission has concluded that Hungary has not made sufficient progress towards a timely and sustainable correction of its excessive deficit. The European Commission proposes to move to the next stage of the Excessive Deficit Procedure (EDP) and recommends that the Council of Ministers decides that no effective action has been taken to bring the deficit below 3% of GDP in a sustainable manner. The Commission will then propose to the Council new recommendations addressed to Hungary with a view to bringing to an end its excessive government deficit.