COUNCIL RECOMM END ATION 
of 20 July 2020 
on the 2020 National Refor m Prog ramme of Malta and deliv ering a Council opinion on the 2020 
Stability Prog ramme of Malta 
(2020/C 282/18) 
THE COUNCIL OF THE EUR OPEAN UNION, 
Havi ng regar d to the Treaty on the Functioning of the European Union, and in particular Articles 121(2) and 148(4) 
thereof, 
Havi ng 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 5(2) thereof, 
Havi ng regar d to the recommendation of the European Commission, 
Havi ng regar d to the resolutions of the European Parliament, 
Havi ng regar d to the conclusions of the European Council, 
Havi ng regar d to the opinion of the Emp loyment Committ ee, 
Havi ng regar d to the opinion of the Economic and Financial Committee, 
Havi ng regar d to the opinion of the Social Prote ction Committ ee, 
Havi ng regar d to the opinion of the Economic Policy Committ ee, 
Whereas: 
(1) On 17 December 2019, the Commission adop ted the Annual Sustainable Growth Strateg y, marking the start of the 
2020 European Semeste r for economic policy coordination. It took due account of the European Pillar of Social 
Rights, proclaimed by the European Parliament, the Council and the Commission on 17 November 2017. On 
17 December 2019, on the basis of Regulation (EU) No 1176/2011 of the European Parliament and of the 
Council (2), the Commission also adopt ed the Aler t Mechanism Repor t, in which it did not identify Malta as one of 
the Member States for which an in-dept h review would be carried out. On the same date , the Commission also 
adopt ed a recommendation for a Council recommendation on the economic policy of the euro area. 
(2) The 2020 countr y repor t for Malta was published on 26 Febr uary 2020. It assessed Malta’s progress in addressing 
the countr y-specif ic recommendations adopt ed by the Council on 9 July 2019 (3) (‘the 2019 countr y-specific 
recommendations’ ), the follo w-up given to the countr y-specific recommendations adopt ed in previous years and 
Malta’s progress towards its national Europe 2020 targe ts. 
(3) On 11 March 2020, the World Health Org anization officially declared the COVID-19 outbreak a global pandemic. It 
is a severe public health emerg ency for citizens, societies and economies. It is putting national health systems under 
severe strain, disrupti ng global supply chains, causing volatility in financial mark ets, trigge ring consumer demand 
shocks and having negative effects across various sectors. It is threatening people ’s jobs and incomes as well as 
compan ies’ business. It has delivered a major economic shock that is already having serious repercussions in the 
Union. On 13 Marc h 2020, the Commission adopt ed a communication calling for a coordinat ed economic 
response to the crisis, involving all actors at national and Union level. 
(4) Several Member States have declared a state of emergency or introduced emergency measures. Any emerg ency 
measures should be strictly propor tionat e, necessar y, limited in time, and in line with European and intern ational 
standards. They should be subject to democratic oversight and independent judicial review . 
(1)OJ L 209, 2.8.1997, p. 1. 
(2)Regulation (EU) No 1176/2011 of the European Parliament and of the Council of 16 November 2011 on the prevention and 
correction of macroeconomic imbalances (OJ L 306, 23.11.2011, p. 25). 
(3)OJ C 301, 5.9.2019, p. 107. EN Offi cial Jour nal of the European Union C 282/116                                                                                                                                       26.8.2020   
(5) On 20 March 2020, the Commission adopt ed a communication on the activation of the general escape clause of the 
Stability and Growt h Pact. The general escape clause, as set out in Articles 5(1), 6(3), 9(1) and 10(3) of Regulation 
(EC) No 1466/97 and Articles 3(5) and 5(2) of Council Regulation (EC) No 1467/97 (4), facilita tes the coordination 
of budgetary policies in times of severe economic down turn. In its communication of 20 March 2020, the 
Commission considered that, given the expected severe economic downtur n resulting from the COVID-19 
pandemic, the conditions for the activation of the general escape clause had been met and asked the Council to 
endorse this conclusion. On 23 March 2020, the ministe rs of finance of the Member State s agreed with the 
assessment of the Commission. They agreed that the severe economic downtur n requires a resolut e, ambitious and 
coordinat ed response. The activation of the general escape clause allows for a temporar y depar ture from the 
adjustment path towards the medium-ter m budgetary objective, provid ed that this does not endanger fiscal 
sustainability in the medium term . For the corrective arm, the Council may also decide, on a recommendation from 
the Commission, to adopt a revised fiscal trajector y. The general escape clause does not suspend the procedures of 
the Stability and Growth Pact. It allows Member States to depar t from the budget ary requirements that would 
normally apply while enabling the Commission and the Council to under take the necessar y policy coordination 
measures within the framew ork of the Pact. 
(6) Continued action is required to limit and control the spread of the COVID-19 pandemic, strengthen the resilience of 
the national health system s, mitig ate the socioeconomic consequences of the pandemic through suppor tive 
measures for business and households, and ensure adequate health and safety conditions at the workplace with a 
view to resuming economic activity . The Union should fully use the various tools at its disposal to suppor t Member 
State s’ efforts in those areas. In parallel, Member States and the Union should work together to prepare the measures 
necessar y to bring about a retur n to the normal functioning of our societies and economies and to sustainable 
growth, integratin g, inter alia, the green transition and the digital transf ormation, and drawing lessons from the 
crisis. 
(7) The COVID-19 crisis has highlight ed the flexibility that the internal market offers to adapt to extraordinar y 
situations. Howe ver, in order to ensure a swif t and smooth transition to the reco very phase and the free mov ement 
of goods, services and workers, excep tional measures that prevent the internal mark et from functioning normally 
should be remo ved as soon as they are no long er indispensable. The current crisis has shown the need for crisis 
preparedness plans in the health sector . Impro ved purchasing strateg ies, diversifi ed supply chains and strateg ic 
reser ves of essential supplies are among the key elements for developing broader crisis preparedness plans. 
(8) The Union legislator has already amended the relevant legislative framew orks by means of Regulations 
(EU) 2020/460 (5) and (EU) 2020/558 (6) of the European Parliament and of the Council to allow Member States to 
mobilise all unused resources from the European Structural and Investment Funds so they can address the 
excep tional effects of the COVID-19 pandemic. Those amendments will provide additional flexibility , as well as 
simplified and streamlined procedures. To alleviate cash-f low pressures, Member State s can also benefit from 
a 100 % co-f inancing rate from the Union budge t in the 2020-2021 accounting year . Malta is encourage d to make 
full use of those possibilities to help the individuals and sectors most affect ed. 
(9) Malta submitt ed its 2020 National Reform Programme on 30 Apr il 2020 and its 2020 Stability Programme on 
2 May 2020. In order to take account of their inter linkages, the two programmes have been assessed at the same 
time. 
(10) Malta is currently in the preventive arm of the Stability and Gro wth Pact. 
(4)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). 
(5)Regulation (EU) 2020/460 of the European Parliament and of the Council of 30 March 2020 amending Regulations 
(EU) No 1301/2013, (EU) No 1303/2013 and (EU) No 508/2014 as regar ds specific measures to mobilise investments in the 
healthcare systems of Member States and in other sectors of their economies in response to the COVID-19 outbreak (Corona virus 
Response Invest ment Initiative) (OJ L 99, 31.3.2020, p. 5). 
(6)Regulation (EU) 2020/558 of the European Parliament and of the Council of 23 Apr il 2020 amending Regulations 
(EU) No 1301/2013 and (EU) No 1303/2013 as regar ds specific measures to provide excep tional flexibility for the use of the 
European Structural and Investments Funds in response to the COVID-19 outbreak (OJ L 130, 24.4.2020, p. 1). EN Offi cial Jour nal of the European Union 26.8.2020                                                                                                                                       C 282/117   
(11) In its 2020 Stability Programme, the govern ment plans the headline balance to deter iorate from a surplus of 0,5 % of 
gross domestic product (GDP) in 2019 to a deficit of 7,5 % of GDP in 2020. The deficit is projected to decline to 
3,6 % of GDP in 2021. After decreasing to 43,1 % of GDP in 2019, the general govern ment debt-t o-GDP ratio is 
expecte d to increase to 54,5 % in 2020 according to the 2020 Stability Programme. The macroeconomic and fiscal 
outlook is affected by high uncer tainty because of the COVID-19 pandemic. 
(12) In response to the COVID-19 pandemic, and as part of a coordinated Union approach, Malta has adopt ed timely 
budgetary measures to increase the capacity of its health system, contain the pandemic, and provid e relief to those 
individuals and sector s that have been particularly affect ed. According to the 2020 Stability Programme, those 
budgetary measures amount ed to 4,1 % of GDP . The measures include wag e supplements for distressed sector s, 
increasing healthcare capacity , and COVID-19 relat ed social measures. In addition, Malta has announced measures 
that, while not having a direct budgetary impact, will contr ibut e to providing liquidity suppor t to businesses. The 
2020 Stability Programme estimat es that government guarant ees will allow banks to leverage the portfolio of new 
compan y loans by up to 6,1 % of GDP . Those measures include loan guarantees. The 2020 Stability Programme 
also confir ms earlier announcements of tax deferr als for personal and corporate income taxes, value added tax and 
social contr ibutions. Overall, the measures take n by Malta are in line with the guidelines set out in the Commission 
communication of 13 March 2020. The full implementation of the emerge ncy measures and of suppor tive fiscal 
measures, followed by a refocusing of fiscal policies towards achieving prudent medium-ter m fiscal positions when 
economic conditions allow , will contr ibut e to preser ving fiscal sustainability in the medium term . 
(13) Based on the Commission 2020 spring forecast under unchanged policies, Malta’s general government balance is 
forecast at -6,7 % of GDP in 2020 and -2,5 % of GDP in 2021. The general govern ment debt ratio is projected to 
remain below 60 % of GDP in 2020 and 2021. 
(14) On 20 May 2020, the Commission issued a repor t prepared in accordance with Article 126(3) of the Treaty because 
of Malta’s planned breach of the 3 %-of-GDP defici t threshold in 2020. Overall, the Commission’s analysis suggests 
that the deficit criterion as defined in the Treaty and in Regulation (EC) No 1467/97 has not been fulfilled. 
(15) In response to the COVID-19 pandemic, Malta took containment measures through an effective health 
communication campai gn, putting in place physical isolation and quarantine measures, monitor ing and a high level 
of testin g and contact tracing. The Malte se author ities have also been working to increase the capacity of hospitals, 
including those dedicat ed to intensive therap y units. Direct acquisition of personal prot ective equipment (PPE) is 
being under taken at national level. Malta has also joined the Union joint procurement process for PPE, laborat ory 
reagents and tests and ventilators . With respect to medicines and active ingredients, Malta is actively monitoring the 
situation in order to identify and anticipate any possible shor tages and take immediate remedial action, especially in 
the case of border closures by countr ies that usually supply the medicines or active ingredients. On 12 May 2020, 
the Commission approved an EUR 11,5 million scheme to suppor t investments in the production of COVID-19- 
relevant products, including medicinal products such as vaccines, hospital and medical equipment, including 
ventilators, and prote ctive clothing and equipment. There has also been effective redeplo yment and retraining of 
medical staff. Public health specialists who used to occup y various positions within regulatory bodies and ministr ies 
have been fully repur posed and redeplo yed to assist in the response to the pandemic. 
(16) The Maltes e government has suppor ted businesses through financial suppor t for telew orking and subsidies for 
workers on mandat ory quarantine. The government has also provided guarantees and tax deferr al for businesses, 
including self-emplo yed persons. Full-time emplo yees of enterprises operating in sectors such as retail, wholesale, 
touris m and hospitality that suffe red drastically due to the COVID-19 pandemic or sectors that had to temporar ily 
suspend operations on the order of the Super intendent of Public Health will be entitled to up to five days’ salar y per 
week, based on a salar y of EUR 800 per month.. Emplo yees in less harshly affect ed sectors are entitled to one to two 
days’ salar y per week, based on a salar y of EUR 800 per month. The govern ment has also announced suppor t for 
people with disabilities, families with children where both parents are emplo yed and neither is able to telew ork, 
workers who lost their job due to the current crisis and the jobless living in rent ed accommodation. Finally , the 
government will be financing up to 2,5 percentage points of the inter est rates on bank loans take n out by 
businesses hit by the COVID-19 pandemic. EN Offi cial Jour nal of the European Union C 282/118                                                                                                                                       26.8.2020   
(17) The Malt ese health system delivers good health outcomes. However , the COVID-19 pandemic has put the Maltese 
public health system under unprecedented levels of pressure. Efforts that focus on building the capacity of the 
healthcare system to respond effectively to pandemic crises such as COVID-19 would impro ve its resilience. The 
follow ing areas require particular monit oring: (a) the increasing reliance on migrant nurses in acut e and long-ter m 
care and on an ageing private general -practitioner workf orce; (b) the difficulties in making new and innov ative 
medicines available; (c) the high out-of-pock et expenditure on primar y and outpatient care and on some medicines; 
and (d) waiting lists for outpatient care specialties, whic h are consistentl y long and have been increasing recently . 
Reor ienting service deliver y away from hospitals to primar y care also remains a key priority. 
(18) According to the Commission 2020 spring forecast, unem ployment is expected to rise to 5,9 % in 2020 before 
decreasing to 4,4 % in 2021. In order to mitig ate the serious impacts of the crisis on emplo yment, Malta took 
emerge ncy measures, in consultation with social partners, to prevent lay-offs by favouring shor t-time work inste ad. 
The adoptio n of shor t-time work arrang ements on a more permanent basis would also prot ect jobs in the transition 
towards economic reco very. Ensur ing adequate suppor t and access to social protection for all workers, including the 
self-emplo yed, and accounting for a possibly exte nded duration of unemplo yment are crucial. Malta’s social 
prote ction syste m also needs to ensure that adequate suppor t is provid ed to foreign workers in finding alternative 
emplo yment, in retaining work permits when possible and in accessing other social services. The share of low- 
skilled adults is compar atively high, aggra vated by a high share of early school leav ers. The current crisis may 
exacerbate skills shor tages in some sectors and redefin e skill needs in others. This makes the mapping of skills and 
the reskilling of work ers even more important, in particular for digital and green skills. Malta has made recent 
progress on education and training, but signif icant challeng es remain, including a high share of pupils with 
insuffi cient levels of basic skills. 
(19) The COVID-19 crisis has made swif t deplo yment of liquidity suppor t to businesses an urgent priority for Malta. 
Ensur ing a continuous flow of credit, and access to finance, is of the essence, especially to small and medium-sized 
enterprises in the most impacted sectors. The banking system has an impor tant role to play in the effective 
imp lementation of liquidity measures by providing loans and channeling public guarant ees, thus overcoming the 
conser vative approac h to lending practices shown before the crisis. In the process of designing and implemen ting 
these measures, the resilience of the banking sector needs to be taken into account. 
(20) To foster the economic recovery , it will be important to front-load mature public investment projects and promote 
private investment, including through relevant reforms. Investments in suppor t of the reco very represents an 
oppor tunity to set the Maltes e econom y on a more sustainable track. Malta’s transf ormation into a climat e-neutral 
econom y will require sizeable private and public investment over a sustained period of time. Investment to reduce 
greenhouse gas emissions, descr ibed in its National Energy and Climate Plan, and to address other nega tive 
environmental external ities, in particular in sector s like constr uction and transpor t, can help achieve the dual 
objectives of economic recovery and sustainability . Suppor ting the renovation of the existing building stock and 
target ed training schemes will help to impro ve the energy performance of buildings. Further investment on 
sustainable transpor t can ensure viable alternati ves to the use of private cars. The programming of the Just 
Transition Fund, whic h is the subject of a Commission proposal, for the period 2021-2027 could help Malta to 
address some of the challeng es posed by the transition to a climat e-neutral economy as presented in Annex D to the 
2020 countr y repor t. This would allow Malta to make the best use of that Fund. 
(21) Placing higher importance on research and innovation and bette r embedding it in the business environment will suppor t 
the sustainability of Malta’s knowledg e-based economic model. Malta has developed e-gove rnment services for citizens 
and businesses, including a number of mobile apps. How ever , their uptake by the public remains low. In order to 
facilitate the economy’s digital transition, it is essential to encourage the use of digital public services by citizens and 
businesses. 
(22) Malta’s shift towards an internati onally oriented service sector and its specialisation in remote gaming, virtual assets 
and its citizenship and residence schemes, while contr ibuting to economic growth, make s it susceptible to mone y- 
launder ing risks, whic h are yet to be mitig ated. To prevent and combat these risks, steps have been take n to 
strengthen the role of the anti-money -launder ing (AML) super visor . Cooperation with other compet ent author ities 
has also been enhanced. However , the Malta Financial Services Auth ority’s practice of insourcing a private EN Offi cial Jour nal of the European Union 26.8.2020                                                                                                                                       C 282/119   
consultancy for super visor y tasks is of concer n. Shor tcomings in the investigat ion and prosecution of mone y- 
launder ing remain a challeng e. Enhancing the national super vision of internationally oriented financial businesses 
licensed in Malta would strengthen the overall govern ance framew ork. In the insurance sector, the cooperation 
between domestic and exte rnal super visors is essential. There is also margin for impro vement in the super vision of 
third-countr y bank branches as well as enhancements in the risk-oriented approach and valuation of adequacy of 
risk manage ment for banking institutions. 
(23) Tackli ng aggressive tax planning remains key to impro ving the efficiency and fairness of tax system s. Spillo ver effects 
of taxpa yers’ aggressive tax-planning strateg ies between Member States call for a coordinat ed action of national 
policies to compl ement Union legislation. Malta has take n steps to address aggressive tax-planning practices by 
imp lementing previously agreed intern ational and European agreed initiatives, but the treatment of resident non- 
domiciled compan ies as well as the investor -citizenship and inve stor-residence schemes, which do not even require 
an individual to be resident for tax purposes in Malta, pose a risk of double non-taxation for both compan ies and 
individuals. 
(24) Malta also faces challenge s in strengthening its institutional capacity to fight corruption. Malta has announced 
reforms to strengthen the investig ation and prosecution of corrupti on and it is consulting relevant stak eholders, 
notably the Venice Commission, on the reform of the judiciar y. Concret e measures have to be adopt ed to compl ete 
all these reforms and mak e them operational. 
(25) While the countr y-specif ic recommendations set out in this Recommendation (‘the 2020 countr y-specific 
recommendations’ ) focus on tack ling the socioeconomic impa cts of the pandemic and facilitating the economic 
recovery , the 2019 countr y-specif ic recommendations also covered reforms that are essential to address medium- 
to long-t erm structural challeng es. The 2019 countr y-specific recommendations remain pertinent and will continue 
to be monit ored throughout next year’s European Semeste r. That includes the 2019 countr y-specific 
recommendations regarding investment-related economic policies. All of the 2019 countr y-specif ic 
recommendations should be taken into account for the strateg ic programming of post-2020 cohesion policy 
funding, including for mitigating measures and exit strateg ies with regar d to the current crisis. 
(26) The European Semeste r provid es the framework for continuous economic and emp loyment policy coordination in 
the Union, which can contr ibut e to a sustainable econom y. In their 2020 National Reform Programmes, Member 
State s have taken stock of progress made in the implementation of the United Nations Sustainable Development 
Goals (SDGs). By ensur ing the full implemen tation of the 2020 countr y-specif ic recommendations, Malta will 
contr ibut e to the progress towards the SDGs and to the common effort of ensur ing compet itive sustainability in the 
Union. 
(27) Close coordination between economies in the economic and monetar y union is key in achi eving a swif t recovery 
from the economic impact of the COVID-19 pandemic. As a Member State whose currency is the euro, Malta 
should ensure that its policies remain consistent with the 2020 euro-area recommendations and coordinated with 
those of the other Member States whose currency is the euro, taking into account political guidance from the 
Eurogroup. 
(28) In the cont ext of the 2020 European Semester , the Commission has carried out a compreh ensive analysis of Malta’s 
economic policy and published it in the 2020 countr y repor t. It has also assessed the 2020 Stability Programme, the 
2020 National Reform Programme and the follow-up given to the countr y-specific recommendations addressed to 
Malta in previous years. The Commission has taken into account not only their relevance for sustainable fiscal and 
socioeconomic policy in Malta but also their compl iance with Union rules and guidance, given the need to 
strengthen the Union’s overall economic govern ance by provi ding Union-level input into future national decisions. 
(29) In the light of this assessment, the Council has examined the 2020 Stability Programme and its opinion (7) is 
reflected in particular in recommendation (1) below , 
(7)Under Article 5(2) of Regulation (EC) No 1466/97. EN Offi cial Jour nal of the European Union C 282/120                                                                                                                                       26.8.2020   
HEREB Y REC OMMENDS that Malta take action in 2020 and 2021 to: 
1. Take all necessar y measures, in line with the general escape clause of the Stability and Gro wth Pact, to effectively 
address the COVID-19 pandemic, sustain the economy and suppor t the ensuing recovery . When economic 
conditions allow , pursue fiscal policies aimed at achieving prudent medium-te rm fiscal positions and ensur ing debt 
sustainability , while enhancing inve stment. Strengthen the resilience of the health system with regar d to the health 
workf orce, critical medical products and primar y care. 
2. Consolidate shor t-time work arrang ements and ensure the adequacy of unem ployment protection for all workers. 
Strengthen the quality and inclusiveness of education and skills development. 
3. Ensure effective implementation of liquidity suppor t to affect ed businesses, including the self-emplo yed. Front-load 
mature public inve stment projects and promote private investment to foster the economic recovery . Focus 
inve stment on the green and digital transition, in particular on clean and efficient production and use of energy , 
sustainable transpor t, waste management, research and inno vation. 
4. Com plete reforms addressing current shor tcomings in institutional capacity and govern ance to enhance judicial 
independence. Continue efforts to adequately assess and mitigat e mone y-launder ing risks and to ensure effective 
enforcement of the anti-money -launder ing framew ork. Step up action to address features of the tax system that 
facilitate aggressive tax planning by individuals and multinationals. 
Done at Brussels, 20 July 2020.  
For the Council 
The President 
J. KLOE CKNER     EN Offi cial Jour nal of the European Union 26.8.2020                                                                                                                                       C 282/121