# Council Decision (EU) 2015/1025Show full title

Council Decision (EU) 2015/1025 of 19 June 2015 abrogating Decision 2013/319/EU on the existence of an excessive deficit in            Malta         

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U.K.

# Council Decision (EU) 2015/1025                     

# of 19 June 2015

# abrogating Decision 2013/319/EU on the existence of an excessive deficit in Malta

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 126(12) thereof,

Having regard to the recommendation from the European Commission,

Whereas:

(1)By Decision 2013/319/EU(1), on the basis of a recommendation from the Commission, the Council decided that an excessive deficit existed in Malta. The                              Council noted that the general government deficit in Malta had reached 3,3 % of GDP in 2012, thus exceeding the 3 % of GDP                              Treaty reference value, while general government gross debt was above the 60 % of GDP Treaty reference value. The Council                              also noted that Malta had not made sufficient progress towards compliance with the debt reduction benchmark and therefore                              did not fulfil the requirements of the transition period(2) following the correction of its excessive deficit in 2012(3).

(2)On 21 June 2013, in accordance with Article 126(7) of the Treaty on the Functioning of the European Union (TFEU) and Article                              3(4) of Regulation (EC) No 1467/97, the Council, upon the recommendation from the Commission, addressed a recommendation to                              Malta with a view to bringing the excessive deficit situation to an end by 2014 at the latest. The recommendation was made                              public.

(3)In accordance with Article 4 of the Protocol (No 12) on the excessive deficit procedure annexed to the Treaty on European                              Union and the TFEU, the Commission provides the data for the implementation of the procedure. As part of the application of                              that Protocol, Member States are to notify data on government deficits and debt and other associated variables twice a year,                              namely before 1 April and before 1 October, in accordance with Article 3 of Council Regulation (EC) No 479/2009(4).

(4)The Council is to take a decision to abrogate a decision on the existence of an excessive deficit on the basis of notified                              data. Moreover, decisions on the existence of an excessive deficit are to be abrogated only if the Commission's forecasts                              indicate that the deficit will not exceed the 3 % of GDP threshold over the forecast horizon(5); and the debt ratio fulfils the forward-looking element of the debt benchmark.

(5)On the basis of the data provided by the Commission (Eurostat) in accordance with Article 14 of Regulation (EC) No 479/2009,                              following the April 2015 notification by Malta, the 2015 Stability Programme and the Commission's 2015 spring forecast, the                              following conclusions are justified:-  After peaking at 3,6 % of GDP in 2012, the general government deficit was reduced to 2,6 % of GDP in 2013 and reached 2,1                                    % of GDP in 2014. The deficit reduction in 2014 was mainly driven by an improvement in the cyclical conditions and budget                                    measures which led to a significant increase in current revenues (by 2,5 % of GDP) which more than offset the increase in                                    current expenditure (by 0,8 % of GDP) and by net capital expenditure (by 0,1 % of GDP) that is explained by a higher absorption                                    rate of EU funds.                                  
-  The stability programme for 2015-2018, submitted by the Maltese government on 30 April 2015, plans the deficit to decline                                    to 1,6 % of GDP in 2015 and to 1,1 % of GDP in 2016. The Commission's 2015 spring forecast projects a deficit of 1,8 % of                                    GDP in 2015 and 1,5 % of GDP in 2016. Thus, the deficit is set to remain below the Treaty reference value of 3 % of GDP over                                    the forecast horizon.                                  
-  The structural balance, which is the general government balance adjusted for the economic cycle and net of one-off and other                                    temporary measures, improved by 1,3 % of GDP over the period 2013-2014.                                  
-  The debt-to-GDP ratio increased to 69,2 % of GDP in 2013, from 67,4 % of GDP in 2012, on account of a temporary debt-increasing                                    stock-flow adjustment. It then decreased to 68,0 % of GDP in 2014. The gross government debt is forecast to continue decreasing                                    to 65,4 % of GDP in 2016 also due to the favourable macroeconomic scenario. In addition, compliance with the forward looking                                    debt rule is ensured in 2014.                                  

(6)As from 2015, which is the year following the correction of the excessive deficit, Malta is subject to the preventive arm                              of the Stability and Growth Pact and should progress towards its medium-term budgetary objective at an appropriate pace, including                              respecting the expenditure benchmark, and comply with the debt criterion in accordance with Article 2(1a) of Regulation (EC)                              No 1467/97. In this context, there appears to be a risk of some deviation from the required adjustment of 0,6 % of GDP towards                              the medium-term budgetary objective in both 2015 and 2016. In 2015, the improvement in the structural balance is forecast                              to be 0,1 % of GDP below the requirement. While the adjustment projected for 2016 is in line with the requirement, there is                              a risk of some deviation over 2015 and 2016 taken together. Therefore, further measures will be needed in 2015 and 2016.

(7)In accordance with Article 126(12) of the TFEU, a Council Decision on the existence of an excessive deficit is to be abrogated                              when the excessive deficit in the Member State concerned has, in the view of the Council, been corrected.

(8)In the view of the Council, the excessive deficit in Malta has been corrected and Decision 2013/319/EU should therefore be                              abrogated,

HAS ADOPTED THIS DECISION:

# Article 1U.K.

From an overall assessment it follows that the excessive deficit situation in Malta has been corrected.

# Article 2U.K.

Decision 2013/319/EU is hereby abrogated.

# Article 3U.K.

This Decision is addressed to Malta.

Done at Luxembourg, 19 June 2015.

*For the Council*                            

*The President*                            

J. Reirs                            

1

Council Decision 2013/319/EU of 21 June 2013 on the existence of an excessive deficit in Malta (OJ L 173, 26.6.2013, p. 52).                           

2

Following the abrogation of the EDP in December 2012, in line with the Stability and Growth Pact, Malta benefited from a three-year                              transition period to comply with the debt reduction benchmark, starting in 2012. The requirements during the transition period                              are laid down in the second subparagraph of Article 2(1a) of Council Regulation (EC) No 1467/97 of 7 July 1997 on speeding                              up and clarifying the implementation of the excessive deficit procedure (OJ L 209, 2.8.1997, p. 6) and further detailed in the ‘Specifications on the implementation of the Stability and Growth Pact and Guidelines on the                              format and content of Stability and Convergence Programmes’ of 3 September 2012 (See: http://ec.europa.eu/economy_finance/economic_governance/sgp/pdf/coc/code_of_conduct_en.pdf).                              The Minimum Linear Structural Adjustment (MLSA) required for 2012 was equal to 0,4 pps of GDP, while the structural deficit                              worsened by 0,5 pp. of GDP in 2012.                           

3

The general government deficit and debt for 2012 were subsequently revised to currently 3,6 % of GDP and 67,4 % of GDP, respectively.

4

Council Regulation (EC) No 479/2009 of 25 May 2009 on the application of the Protocol on the excessive deficit procedure annexed                              to the Treaty establishing the European Community (OJ L 145, 10.6.2009, p. 1).                           

5

In line with the Specifications on the implementation of the Stability and Growth Pact and Guidelines on the format and content                              of Stability and Convergence Programmes.