Press Release
(Maltese version below)
On 30 September 2015, the Malta Fiscal Advisory Council (MFAC) presented to the Minister for Finance its assessment of the Government’s fiscal strategy and performance based on the Medium Term Fiscal Strategy 2015-2018, the Annual Report 2014 and the Half Yearly Report 2015 recently published by the Ministry for Finance. The MFAC confirms that the Government has broadly complied with the requirements of the Fiscal Responsibility Act, 2014.
The MFAC notes that the targets for the fiscal deficit- and public debt-to GDP ratios for 2014 have been met and this has enabled the country to exit from the EU’s Excessive Deficit Procedure. The MFAC considers that the macroeconomic projections remain plausible albeit subject to a number of risks, while the positive fiscal outturn for the first six months of the year suggests that the headline fiscal target ratios for 2015 can reasonably be met.
Robust economic growth is anticipated to contribute higher than expected revenues and compensate for the upward revision in the expenditure plans for the year. It is important that the Government remains vigilant to ensure that any significant deviations from the fiscal targets are rapidly addressed.
The MFAC views positively the added fiscal transparency created by requirements stipulated under the Fiscal Responsibility Act. In this respect, the MFAC invites the Government to enhance the transparency of the reports further by providing additional explanations to justify the assumptions behind the fiscal forecasts, and by elaborating on the main drivers of the projected changes in contingent liabilities. The MFAC also considers important that the Government fully explains the revenue and expenditure measures underpinning its strategy, beyond the current year.
The MFAC acknowledges that the current main priority for fiscal policy in Malta is to achieve further progress towards the Medium Term Objective (MTO) of structural balance by 2019, and to gradually lower the public debt ratio to 60% of GDP, in line with the timetable agreed with the European Commission. In this respect, the current conduct of fiscal policy appears to be conducive to prudent economic and budgetary management to the extent that this is geared towards attaining these goals without acting as a drag on economic activity. This will enable the Government to have sufficient flexibility to act in the eventuality of a deterioration of the current benign economic conditions at some point in the future.
The MFAC also encourages the Government to proceed with expenditure rationalisation where feasible, as this would ensure that sufficient resources can be channelled into more productive activities and to support initiatives aimed at protecting the vulnerable segments within society, without endangering fiscal sustainability. Expenditure rationalisation and timely decisions to address the long term challenges of ageing would enable a higher degree of predictability regarding the level and stability of future tax rates which is important for private sector planning and decision making. Initiatives aimed at incentivising work and building human capital are also positively viewed by the MFAC as these contribute to raise Malta’s potential output, thereby sustaining rising standards of living.
On the other hand the MFAC stresses on the importance that possible revenue windfalls are used to bring about fiscal consolidation and are not used to finance undue permanent expenditure commitments.
Overall, the MFAC is of the opinion that the Government is complying with the announced fiscal strategy aimed at maintaining public finances on a sustainable track. On the basis of the information presented by the Ministry for Finance, the MFAC considers that the budget rule is being satisfied. The structural adjustment effort as planned by the Government is also consistent with the minimum effort indicated in the EU’s Country Specific Recommendations.
The full report, entitled “An Assessment of the Medium Term Fiscal Strategy 2015-2018, Annual Report 2014, and Half Yearly Report 2015”, is available on the website of the Malta Fiscal Advisory Council http://www.mfac.gov.mt.
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Il-Kunsill Konsultattiv Fiskali Malti jippublika l-evalwazzjoni tal-istrateġija fiskali u l-ħidma tal-Gvern dwar is-sitwazzjoni baġitarja
Fit-30 ta’ Settembru 2015, il-Kunsill Fiskali Konsultattiv Malti (MFAC) ippreżenta lill-Ministru għall-Finanzi r-rapport tal-evalwazzjoni tal-istrateġija fiskali u l-ħidma tal-Gvern ibbażat fuq ir-Rapport dwar Strateġija ta’ Politika Fiskali ta’ Terminu Medju għall-perjodu 2015-2018, ir-Rapport Annwali ghall-2014 u r-Rapport ta’ Nofs is-Sena 2015 ippublikati dan l-aħħar mill-Ministeru għall-Finanzi. L-MFAC jikkonferma li b’mod ġenerali l-Gvern irrispetta l-obbligi kif stabbiliti fl-Att tal-2014 dwar ir-Responsabbilta’ Fiskali.
L-MFAC jinnota li l-miri għad-defiċit fiskali u d-dejn pubbliku meta mqabbla mal-Prodott Domestiku Gross (PDG) ġew milħuqa u dan għen biex il-pajjiż joħroġ mill-Proċedura ta’ Defiċit Eċċessiv tal-Unjoni Ewropea. L-MFAC iqis bħala plawsibbli t-tbassir makroekomomiku għalkemm hemm numru ta’ riskji, filwaqt li x-xejra fiskali għall-ewwel sitt xhur tas-sena tindika li l-miri fiskali għall-2015 jistgħu jintlaħqu b’mod raġonevoli. Hu mistenni li tkabbir ekonomiku b’saħħtu jwassal għal dħul iktar għoli milli previst u jagħmel tajjeb għal spiża iktar għolja għal din is-sena. Huwa importanti li l-Gvern jibqa viġilanti sabiex jiżgura li jekk ikun hemm xi devjazzjonijiet sinifikanti mill-miri fiskali, dawn jiġu ndirizzati malajr.
L-MFAC iħares b’mod pożittiv lejn iż-żieda fit-trasparenza fiskali li ġiet introdotta mill-Att dwar ir-Responsabilta’ Fiskali. Għal dan il-għan, l-MFAC jistieden lill-Gvern biex iżid fit-trasparenza tar-rapporti billi jinkludi iktar spjegazzjonijiet biex jiġġustifika dak li l-Gvern qed jassumi fil-previżjonijiet fiskali u biex jispjega aħjar it-tibdil imbassar fir-responsabbiltajiet kontinġenti. L-MFAC iqis wkoll importanti li l-Gvern jagħti dettalji fuq id-dħul u nfiq li jsostnu l-istrateġija lil hinn mis-sena kurrenti.
L-MFAC jirrikonoxxi li l-prijorita’ ewlenija għall-politika fiskali f’Malta hi li jsir iktar progress lejn l-objettiv baġitarju ta’ terminu medju li jintlaħaq bilanċ strutturali sal-2019, u li gradwalment jitnaqqas id-dejn pubbliku għal 60% tal-PDG, kif maqbul mal-Kummissjoni Ewropea. F’dan ir-rigward, il-politika fiskali kurrenti tidher li qed twassal għal tmexxija ekonomika u finanzjarja prudenti bbażata fuq li jintlaħqu dawn il-miri, mingħajr xkiel għat-tkabbir ekonomiku. Dan jgħin biex il-Gvern ikollu biżżejjed flessibilita’ biex jaġixxi f’każ li fil-futur il-kundizzjonijiet ekonomiċi ma’ jibqgħux daqshekk pożittivi.
L-MFAC iħeġġeġ ukoll lill-Gvern biex ikompli bit-trażżin tal-ispiża fejn hu possibli biex dan jiżgura li jkun hemm riżorsi biżżejjed biex jistgħu jiġu wżati għall-attivitajiet produttivi u biex jipproteġu faxex tas-soċjeta’ vulnerabli, mingħajr ma jkollu effett negattiv fuq is-sostenibilta’ fiskali. It-trażżin tal-ispiża, u deċiżjonijiet f’waqthom li jindirizzaw l-isfidi tal-anzjanita’, ikunu jistgħu jagħtu indikazzjoni iktar ċara fuq il-livell u l-istabilita’ tar-rati tax-taxxa fil-futur, fattur li huwa mportanti għall-ippjanar u t-teħid tad-deċiżjonijiet fis-settur privat. L-MFAC jinnota wkoll b’mod pożittiv l-inizjattivi li jinkoraġġixxu x-xogħol u t-tisħieħ tal-kapital uman, għax dawn isaħħu kemm jista’ jipproduċi l-pajjiż, u b’hekk isostnu l-livel tal-għajxien. Barra minn hekk l-MFAC jenfasiżża l-importanza li dħul mhux mistenni jintuża biex isaħħaħ il-pożizzjoni fiskali u mhux biex jiffinanzja programmi ġodda li jistgħu joħolqu piżijiet eċċessivi ta’ natura permanenti.
L-MFAC huwa tal-opinjoni li l-Gvern qed jimxi fuq l-istrateġija fiskali kif imħabbra u li hi mmirata biex iżżomm l-finanzi pubbliċi fuq livell sostenibbli. Fuq l-informazzjoni preżentata mill-Ministeru għall-Finanzi, l-MFAC jikkunsidra li r-regola tal-baġit qed tkun milħuqa. Il-pjan ta’ aġġustament strutturali kif ippjanat mill-Gvern huwa wkoll konsistenti mar-rakkomandazzjonjiet tal-Unjoni Ewropea kif indikati fil-Country Specific Recommendations.
Ir-rapport sħiħ, bl-isem “An Assessment of the Medium Term Fiscal Strategy 2015-2018, Annual Report 2014, and Half Yearly Report 2015”, jinsab fuq is-sit elettroniku tal-Kunsill Fiskali Konsultattiv Malti http://www.mfac.gov.mt.