Proposal for a COUNCIL DECISION on the existence of an excessive deficit in Malta
Date: 2024-07-08
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: Malta, budget deficit, economic policy, economic reform, gross domestic product, public debt, public finance, stability pact

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   EUROPEAN COMMISSION  Brussels, 8.7.2024  COM(2024) 514 final 2024/0174 (NLE)  Proposal for a COUNCIL DECISION on the existence of an excessive deficit in Malta   
 
2024/0174 (NLE) 

Proposal for a 

COUNCIL DECISION 

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(6) thereof, 

Having regard to the proposal from the European Commission, 

Having regard to the observations made by Malta, 

Whereas: 

1. 

2. 

3. 

According  to  Article  126  of  the  TFEU,  Member  States  shall  avoid  excessive 
government deficits. 

The Stability and Growth Pact (SGP) is based on the objective of sound government 
finances as a means of strengthening the conditions for price stability and for strong, 
sustainable  and  inclusive  growth  underpinned  by  financial  stability,  thereby 
supporting  the  achievement  of  the  Union’s  objectives  for  sustainable  growth  and 
employment. 

The  excessive  deficit  procedure  (EDP)  under  Article  126  TFEU,  as  clarified  by 
Council  Regulation  (EC)  No  1467/97  on  speeding  up  and  clarifying 
the 
implementation  of the excessive deficit procedure (1) (which is  part of the  Stability 
and  Growth  Pact),  provides  for  a  decision  on  the  existence  of  an  excessive  deficit. 
Protocol No 12 on the EDP, annexed to the Treaty on the European Union and the 
TFEU,  sets  out  further  provisions  relating  to  the  implementation  of  the  excessive 
deficit procedure. Council Regulation (EC) No 479/2009 (2) lays down detailed rules 
and definitions for the application of those provisions. The EU’s reformed economic 
governance  framework,  which  came  into  force  on  30  April  2024,  includes  Council 
Regulation  (EU)  2024/1264  amending  Council  Regulation  (EC)  No  1467/97.  The 
reform kept the rules of the excessive deficit procedure due to non-compliance with 
the  deficit  criterion  broadly  unchanged,  whereas  for  Member  States  with  a 
government  debt  ratio  above  60%  of  GDP  the  excessive  deficit  procedure  due  to 
non-compliance  with  the  debt  criterion  will  focus  on  departures  from  the  net 
expenditure path that will be set by the Council under Regulation (EU) 2024/1263 on 
the basis of the medium-term fiscal structural plans to be submitted by the Member 
States. This Council decision only concerns the excess of the ratio of the government 

(1) 
(2) 

OJ L 209, 2.8.1997, ELI: http://data.europa.eu/eli/reg/1997/1467/2024-04-30. 
OJ L 145, 10.6.2009, p. 1. 

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deficit to gross domestic product (GDP) with respect to the reference value of 3% of 
GDP. 

According  to  Article  126(5)  TFEU,  if  the  Commission  considers  that  an  excessive 
deficit  in  a  Member  State  exists  or  may  occur,  it  must  address  an  opinion  to  the 
Member  State  concerned  and  inform  the  Council  accordingly.  Having  taken  into 
account its report adopted pursuant to Article 126(3) TFEU and having regard to the 
opinion  of  the  Economic  and  Financial  Committee  adopted  pursuant  to  Article 
126(4)  TFEU,  the  Commission  concluded  that  an  excessive  deficit  exists  in  Malta. 
On 8 July 2024, the Commission therefore addressed such an opinion  to Malta  and 
informed the Council accordingly. (3) 

Article 126(6) TFEU states that the Council must consider any observations, which 
the  Member  State  concerned  may  wish  to  make,  before  deciding,  after  an  overall 
assessment,  whether  an  excessive  deficit  exists.  In  the  case  of  Malta,  the  overall 
assessment leads to the following conclusions. 
According  to  the  data  validated  by  Eurostat  on  22  April  2024 (4),  the  general 
government deficit in Malta reached 4.9% of GDP in 2023, and general government 
debt stood at 50.4% of GDP. The Commission’s report under Article 126(3) TFEU 
considered  that  the  excess  of  the  deficit  over  the  Treaty  reference  value  of  3%  of 
GDP in 2023 is not exceptional, as it neither results from an unusual event nor from a 
severe  economic  downturn  in  the  sense  of  the  Stability  and  Growth  Pact.  In  2023 
Malta’s real  GDP grew  by 5.6% of GDP, following GDP growth  of  8.1% in  2022. 
The  excess  over  the  Treaty  reference  value  is  also  not  temporary,  based  on  the 
Commission 2024 spring forecast, which projects the general government deficit to 
remain above 3% of GDP in 2024 and 2025. In sum, the deficit in 2023 was above 
and not close to the 3% of GDP Treaty reference value. The excess is not considered 
to be exceptional as defined by the Treaty and the Stability and Growth Pact, and not 
temporary. Hence, the deficit criterion as defined by the Treaty and Regulation (EC) 
No 1467/97 is prima facie not fulfilled. 

Based on data notified to Eurostat, Malta’s general government deficit is planned to 
reach 4.5% of GDP in 2024. (5) The Commission’s 2024 spring forecast (6) indicates 
a deficit of 4.3% of GDP, above and not close to the Treaty reference value of 3% of 
GDP. 

In line with the requirements of Article 126(3) TFEU, the Commission also analysed 
all  the  relevant  factors  in  its  report  under  Article  126(3)  TFEU.  As  laid  down  in 
Article 2(4) of Regulation (EC) No 1467/97, whenever the government debt-to-GDP 
ratio does not exceed the reference value, relevant factors will be taken into account 
in the steps leading to the decision on the existence of an excessive deficit. Overall, 
the relevant factors examined in the report under Article 126(3) TFEU are assessed 

Euro 

All EDP-related documents for Malta can be found at: https://economy-finance.ec.europa.eu/economic-
and-fiscal-governance/stability-and-growth-pact/corrective-arm-excessive-deficit-procedure/closed-
excessive-deficit-procedures/malta_en . 
Eurostat 
April 
https://ec.europa.eu/eurostat/en/web/products-euro-indicators/w/2-22042024-AP . 
Planned  deficit  as  reported  to  Eurostat  in  the  context  of  spring  2024  fiscal  notification.  See: 
https://ec.europa.eu/eurostat/web/government-finance-statistics/excessive-deficit-procedure/edp-
notification-tables . 
European Economic Forecast - Spring 2024, European Economy-Institutional Paper, No 286, 15 May 
2024. 

Indicators 

published 

2024. 

See: 

22 

on 

4. 

5. 

6. 

7. 

8. 

(3) 

(4) 

(5) 

(6) 

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9. 

as  presenting  a  mixed  picture.  The  consideration  of  these  relevant  factors  does  not 
modify the conclusion that the deficit criterion in the Treaty is not fulfilled. 

In  view  of  the  deadline  of  20  September  2024  for  the  submission  of  the  national 
medium-term fiscal-structural plan in accordance with Article 36 of Regulation (EU) 
2024/1263,  the  Council  takes  note  that  the  next  step  in  the  procedure,  namely  the 
Commission  recommendation  for  a  Council  recommendation  under  Article 
126(7) TFEU on the correction of the excessive deficit, will take place together with 
the  Commission  opinions  on  the  draft  budgetary  plans  of  euro  area  Member  States 
under  Article  7  of  Regulation  (EU)  No  473/2013.  This  approach  allows  to  ensure 
consistency  between  the  budgetary  requirements  under  the  excessive  deficit 
procedure and the adjustment path set out in the medium-term fiscal-structural plans. 
Enabling  such  consistency  while  avoiding  a  surveillance  gap  under  the  excessive 
deficit procedure, requires a timely submission of the Member States’ medium-term 
fiscal-structural plans. This timeline is exceptional and linked to the transition to the 
new framework, therefore not setting a precedent. The Council also takes note that, 
in  the  absence  of  a  timely  submission  of  the  medium-term  plan,  the  Commission 
recommendation  for  a  Council  recommendation  under  Article  126(7)  will  consider 
the  reference  trajectory  transmitted  by  the  Commission  to  the  Member  State 
determined according to Regulation (EU) 2024/1263. 

HAS ADOPTED THIS DECISION:  

Article 1 

From  an  overall  assessment  it  follows  that  an  excessive  deficit  exists  in  Malta  due  to  non-
compliance with the deficit criterion. 

Article 2 

This decision is addressed to the Republic of Malta.  

Done at Brussels, 

For the Council 
The President 

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