CELEX: 51977PC0547
Language: en
Date: 1977-11-03
Title: Draft DECISION OF THE ASSOCIATION COUNCIL defining the guidelines for cooperation between the Community and Malta (submitted to the Council by the Commission)

ARCHIVES HISTORIQUES
DE LA COMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (77) 547
Vol. 1977/0175
 ---pagebreak--- Disclaimer
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 ---pagebreak---   COMMISSION OF THE EUROPEAN COMMUNITIES
                                                 COM(77)547 final
                                                 Brussels , 3 November 1977
                                     Draft
                        DECISION OF THE ASSOCIATION COUNCIL
                defining the guidelines for cooperation between the
                               Community and Malta
                ( submitted to the Council by the Commission )
COM ( 77 ) 547 final
 ---pagebreak---              COMMISSION COMMUNICATION TO THE COUNCIL
        At the second meeting of the EEC-Malta Association Council held on
24 March 1977» the Community stated its readiness to undertake, with Malta's
collaboration , the preparatory work for the implementation of the oooperation
provided for in the Protocol laying down certain provisions relating to
the EEC-Malta Association Agreement *                                   -
                                                                        J
        At the request of the Maltese Government , the Community also gave
its agreement to work beginning, in the context of technical a&d financial
cooperation , on the appraisal of projects so that , where appropriate,
deoisions could be taken as soon as the Protocol entered into force * ' The
Community stated its readiness to help the Maltese Government to establish
a team of industrial specialists which would have the task of preparing
an industry-based eoonomio development strategy, of identifying projeots and
encouraging initiatives from European entrepreneurs for their implementation*
        Pursuant to the decision of the Association Council t the Commission
is putting forward in this communication proposals for the position to be
adopted by the Community*
        The preparatory work to be undertaken jointly by the Community
and Malta with regard to economic , technical and financial cooperation
will have to be carried out on the basis of the guidelines adopted
by the Community* It will then be necessary to have those guidelines
approved by the two parties at a forthcoming meeting of the Association
Council .
        The conclusions of the report prepared by the team of industrial
specialists referred to above will make it possible at a later stage to set
out in practical tenns how the Community aid is to-be used under the
guidelines adopted by the Association Council *                   /
 ---pagebreak---         The Comnission has attached a memo on tho economic and finanoial  ,. ' :
situation in Malta, most of the data for which w*?re collected during the
fact-finding mission carried out in March by representatives of the ComaiM; ?
and the European Investment Bank* The Bank has also collaborated closely
in drawing up the annexed proposals concerning the implementation of
technical and finanoial cooperation*
 ---pagebreak---       Decision of the Association Counoil defining the guidelines for
                 cooperation between the Community and Malta*
           Having regard to the Protocol laying down oertain provisions relating
  to the Agreement establishing an association between the European Economic
  Community and Malta, and in particular Articles 18 and 21 (l ) and Artiole 9(l )
  of the Financial Protocol ,
           Whereas Article 18 provides for the institution of oooperation with
  the aim of contributing to the development of Malta by efforts compl eoentary
  to those made by Malta itself and of strengthening existing economio
  links on as broad a basis as possible for the mutual benefit of both parties ;
           Whereas, in accordance with Artiole 2l(l ) of the Protoool and Artiole
. 9(l ) of the Financial Protocol , it is necessary to define the general
  guidelines for this cooperation and the speoifie objectives of financial and
  technical cooperation,                                 ; V
  HAS    DECIDED  AS  FOLLOWS :
                                 Artide 1
           The following objectives shall be taken as general guidelines
  for the cooperation to be established between the Community and Malta for
  the mutual benefit of both parties :                 '
( i) The development and modernization of Maltese industry in order
       to help create employment , increase industrial productivity and
       contribute to balance of payments equilibrium !
 ---pagebreak---   ( ii ) The development of basio infrastructure and of projects for vocationa
          training and research , these being crucial for tho attainment of
          the above objectives :
(iii ) Tfce strengthening of oooperation between European and Maltese firms
          in the industrial field to facilitate the transfer of technology
          ajid the inflow of capital#
                                 Artide 2
          Technioal and financial cooperation will be put into effeot in
accordance with the following principles :
    ( i ) An effort will be made to use Community aid to support the economic
          cooperation schemes to be implemented under Article 20 of the Protoool *
  ( ii )  Special attention will be paid to operations Mhich would permit
          the simultaneous use of different forms of aid, in particular to
          operations likely to attraot technology, capital and other benefits
          resulting from the implementation of the above mentioned Artiole 20#   -
( iii ) Community aid measures will be designed to enoourage, if possible,
          other suppliers of funds to give aid , in particular in the oontext
          of triangular cooperation#
                                 Article 3
      • '       /
          On the basis of the principles set out in Artiole 1 and in the light
of the objectives of Malta 's development plan, the aid speoified in Artiole 2
of the Financial Protocol will be used in accordance with the provisions of
that Protocol to finance or part-finance projects and measures whioh correspond
                  *
to the following economio priorities :
 ---pagebreak---                                          - 3 -
  I.      TECHNICAL ASSISTANCE IN TRAINING
          ( i ) Technical assistance for the preparation of a development
                strategy and to ensure the effectiveness of the process of
                selecting , preparing, executing and administering projects }
        ( ii ) Technical assistance for the development of export markets
                ( surveys , trade relations , trade networks ).
 n.       DEVELOPMENT OP PRODUCTION
                                             Industry
          ( i ) Establishment of infrastructure necessary for industrial development
                (such as industrial estates or projects for the production of
                certain primary products);
        ( ii ) Development of industries which create stable employment , in
                particular those requiring a highly skilled workforce j
      ( iii ) Development of industries that can use the production or repair
                equipment left on military bases $
        ( iv) Projects which make use of Malta 's geographical position and
                existing infrastructure ( service and supply bases).
                                             Agriculture
                Development and modernization of agriculture ana fisheries .
ni .      TOURISM
          Improvement of the potential for tourism and diversification of
          reception capacity , in particular tourism infrastructure projects .
 IV .    SCIENTIFIC COOPERATION
          Cooperation activities in the scientific , technological and environmental
          protection fields , particularly in certain areaa of research on solar
          energy, water and air pollution , standards , reference materials and
          measurements , and data-processing services .
 ---pagebreak---                                                             MAL TA
                                         ECONOMIC        AND     FINANCIAL        SITUATION ;
Provïsional oddrcss : 200, rue de la Loi, 1040 Brusscls - Téléphoné 350040-358040 - TefegfOpfciC oddress : « COMEUR Brussels »
                                                    Telex : . COMEURBRU 2 ) 877 .
 ---pagebreak---                              TABLE OP CONTENTS
SUMMARY AND CONCLUSIONS
1 . . GENERAL INTRODUCTION
2.    POPULATION AND EMPLOYMENT
3.    ECONOMIC OBJECTIVES OP THE PLAN
4 . ; RECENT TREND OP THE ECONOMIC SITUATION
      (a) Growth and origin of the national product
      ("b) Consumption, savings and investment
      ( c ) Public finance
      (d ) Currency, credit and the hanking system
      ( e ) Prices and wages
      ( f) External trade and the "balance of payments
      (g) External debt
5.    SITUATION IN THE MAIN SECTORS
      (a) Agriculture and fisheries
      (h) Manufacturing industry
      ( c ) Shipyards
      (d ) Water and energy
      ( e ) Transport and communications
      ( f) Tourism
6.    SHORT- AND MEDIUM-TEHM PROSPECTS
 ---pagebreak---                                                       Lil
   TABLES CONTAINED IN THE TEXT
: Average annual growth and sectoral                7
  distribution of GDP envisaged b,y the
  1973-80 Plan
t Annual average growth of GNP                      8
: Structure of GDP by sector of origin •     '      9
S Structure of resources and employment            11
: Financing of investment                          12
l General State Budget (1969-1976 )        •       14
  Money supply and main counterparts \             16
  Annual increase in the retail price index      v 17
  Trend of the balance of payments (1970-76)       19
  Public external debt ( part paid) as a           20
  percentage of GDP for the year in question ;
: Debt servicing as a percentage of exports        21
  of foods and non-factor services
j Breakdown of industrial firms by numbers         23
  employed in 1975
         STATISTICAL ANNEXES
X Sectoral breakdown of workers in employment
: Sectoral breakdown of gross fixed capital
  formation
S Breakdown of cif imports by product and main
  countries of origin
S Breakdown of exports by product and main
  countries of destination ( fob)
: Gold and foreign currency reserves
t Breakdown of the value of agricultural
  production
: Growth of manufacturing industry and breakdown
  of its added value ($)
 ---pagebreak---                           EXCHANGE HATES
               1 u.a .                              £3f 1
         a in Maltese pounds             «* in US/I       » in u»a«
                (£M )
End 1973       0.^7                         2.59              2.15
End 197^       0A7                          2.66             v2.1 2
tnd 1975       0.^7                         2#lf8             2 " 15
End 1976       0*W5                          2.3^             2*07
 ---pagebreak---                                 SUMMARY  AND  CONCLUSIONS
              Ihe Republio of Malta has a population of 320 000 on a land area
     of 320 km. ( 2 )1 It comprises four islands# Approximately $($> of the populatim
     lives on the island of Malta, where population density is in excess of 1 0G-
     inhab#/km# (v 2 ') The islands have an uneven relief but are of low altitude# The
     strategic position of the archipelago , at the centre of the Mediterranean,
     its climate and role as a place of tourism are Malta's only natural advantages*
     The shortage of water restricts the agricultural possibilities and the
     industrial sector is handicapped by the small size of the local market# The
                                                                          V
     economic and sooial infrastructure is well -developed, and with a per capita
     GNP of US 1 700, Malta is in a similar position to Portugal#
              Despite the efforts at restructuring undertaken t>y the Government in
     the past , the Maltese economy is still largely dependent on the British
     military bases# The agreement setting 1979 as the date for their definitive
     closure will therefore have considerable economic repercussions; it is
     obliging the country to ertend its restructuring effort in order to counter­
     balance the loss of revenue and employment brought about by the progressive
     withdrawal of the British troops# This effort is at the basis of the revised
     1973-80 Plan , which envisages investments totalling £M 240 million during
     the period 1977-79 in order to create 23 7000 new jobs^and reach a GDP
                                        1 2)
     growth rate of 7*5% P®? annum# v '
              During the first four years of the Plan, economic growth exceeded
     the set objectives# GDP increased at an average annual rate of l6fo, This
     favourable trend is due essentially to the development of industrial exports
      ( ready-made olothing, foodstuffs ) and of tourism# Manufacturihg industry
        now accounts for a third of GDP compared with only a Quarter in 1972 .
        It provides jobs for approximately 25$ of the working population. Services
        remain, however, the mainstay of the Maltese economy (52% of GSP).
(1 ) The investments cost per new job seems relatively low (approximately
      21 000 u.a.)j however, all , or at least the vast majority, of the investment
      operations necessary to create approximately 12 000 jobs have already been
      carried out . Lastly, most of the new investment operations envisaged are in
      light industry .
 (2) Unless otherwise stated, all growth rates express increases in real terms.
 ---pagebreak---           After a fairly sharp drop between I967 and 1972 A aueed by a property
 crisis and budgetaiy restrictions , the level of gross fixed capital        '
 formation picked up rapidly, increasing from \}% of GDP in 1973 to 27% in
 1976 (compared with the target of 25$ laid down in the Plan). This recov r :
 was principally due to public investment , the volume of which increased
 appreciably mainly as a result of direct State participation in industrial
 projects . In 1975 and 1976 , more than 50% of the volume of investment
 was financed by domestic savings , compared with only 8% in 1972 . If one
 takes into account the increase in net revenue , transfers from abroad
  ( transfers from emigrant workers , the rents for the bases , subsidies
 from the United Kingdom ) and of the loans obtained on favourable terms , the
 resources available for financing are at present well in excess of the
 total investments .
          The rents paid for the military bases are of immense importance to
 public finances . Thanks to these payments , the current net budgetary
 position covers approximately two-thirds of public capital expenditure .
 For some years now , the State has been playing an active part in setting up
 new industrial activities , in particular by developing industrial zones of
itself launohing new undertakings# This has significantly increased publio
capital expenditure and has given rise to a considerable budget deficit
 ( 1976 : £M 12,5 million • 15% of budget revenue and 6% of GDP). Most of
this deficit has been financed by grants and loan9 on favourable terms
obtained mainly from the United Kingdom , the People's Republio of China
and a number of Arab States#
          The scarcity of natural resources and- the email area of the oountry
oblige Malta to import most of what it needs * lhe trade balance is
traditionally in defioit and even the very favourable trend of exports ,
based essentially on textiles , was unable after 1974 "to prevent an inore&s*
in this deficit , which in 1976 reached ^ 200 million* However, despite the
large amounts obtained in revenue from tourism and transfers from emigrant
workers , the transfers conneoted with the activities of the military bases
are neoessary to maintain a positive balanoe of current payments. Thanks
to the net inflow of long-term capital , the gold and foreign exchange '
reserves have regularly increased and totalled $ 620 million at the end'
of 1976 (17 months' imports ).
 ---pagebreak---                                  - 3 ~
        Most of the foreign aid received by Malta ia in the form of grants
or loans on favourable terms .    The publie external debt has tl. Jre fore
remained relatively low ($ 40 million » &fo of GDP ) and its servicing
absorbs less than 1$ of the exports of goods and non-faotor services#
        The apparent improvement in the eoonomio situation in recent years
                                                                               h
cannot , however, conceal the problems facing 'alta in the medium term }
   1.   Since 1975i the traditional emigratory movement of Maltese worker*
        has been reversed and over the last two years , the number of 1
        workers returning has exceeded the number departing by 2 700#
        This phenomenon and the arrival of a large number of young people
        on the labour market , the reduction in the number of workers
        employed on the military bases and redundancies in certain industries
        have led to a considerable inorease in the numbers seeking employment *
        To avoid an increase in the unemployment rate , the Government has
        set up special corps of workers ( Pioneer Corps ) paid from the State
        budget and generally employed on major infrastructure works ;       it
        has tiria been po33i"ole to keep the level of "area?! 072 est iovc to
        approximately 4> of the working population#      If an increase in
        the number of jobless is to be avoided , the reabsorption of the
        workers from the special corps , the foreseeable increase in the
        working population and the evacuation of the military bases will
        require the creation of 23 700 new jobs between now and 1979 *
        According to the Maltese Government , approximately half these jobs
        are virtually guaranteed by projects in the process of implementation
         (tourism , infrastructure , shipyards , industrial projects)# To
        provide the total of 23 700 jobs , a further 12 000 will have to
        be created and an amount of approximately £M 240 million will
        have to be invested between 1977 and 1979*      These two objectives
         seem very ambitious when one considers that their attainment would
         involve the number of jobs created increasing from the level of
         1 400 per annum recorded over the period 1971-75 to 5 800 per
         annum over the period 1977-79 and would also involve the annual
         volume of investment being on average 44$ greater than the volume
         recorded in 1976# Such a jump would seem difficult to make,
         especially as the restricted nature of the domestic market obliges
         Malta to develop industries geared almost entirely to export markets#
      ' The implementation of viable projects of this type may well take
         longer than anticipated , especially as the international economic
         climate> is at present unfavourable#    It is therefore to be feared
         that the employment objectives will not be attained and that the
         level of unemployment will inorease well beyond the present level#
 ---pagebreak---      2#   As from 1979 "the revenue derived from "^e presen e of the military
          tases , which accounts for approximately 14f0 pf Gi;?, 20$ of budget
          revenue and between 25% and 30$ of fore _ gn exchange revenue , will
          no longer be forthcoming and the economy will therefore need to be
          adapted to new resources . The passage through this delicate
          period will be facilitated , however , by the use for a number of
          years of abundant foreign exchange reserves (US      620 million a
          17 months * imports ).
         To establish the basis for a balanced eoonomic development no longer de­
pendent on the activities of the military bases , Malta doubtless has a
number of advantages , notably skilled labour, relatively low wages , tourism.
However, restructuring on this scale seems to be beyond the country* s capa­
cities and will be impossible without external aid#      This is required
essentially in the form of technical assistance and economic cooperation#
Its main contribution could be towards :
    1#   The establishment of an industrial development strategy, including
         the identification and preparation of specific projects#     Given
         the restricted nature of the local market and the danger of heavy
         dependence on export markets , the selection of the branches whose
         activities could be developed is a particularly delioate matter in
         Malta * s case# It will require a very sound assessment of potential
         outlets on the export markets#
    2#   The promotion of projects to be carried out with the help of
         foreign investors#                       .
     3 » The preparation of markets , the establishment of trade relations
          and trade links .
          In more general terms , it is apparent that Malta 's economic future
 is essentially dependent on the extent to which new industries can be
 established by foreign entrepreneurs over the next few years# It is not
 certain , however, that the comparative advantages enjoyed by the country
 are sufficiently attractive in themselves to bring about automatically the
 creation of industrial activities on an adequate scale#      The effectiveness
 of the Community aid will have to be assessed , in the fined analysis ,
 in terms of its contribution towards that objective®
 ---pagebreak---                        1.   GENERAL  INTRODUCTION
        Situated between \-ibya and Sicily, the laltese Archipelago connande
the passage from the Western to the Eastern Mediterranean .   Because of
its strategio position , Malta has been conquer ! on numerous occasions
and suffered severe damage during the Second World War#    The country has
been independent since 1964 and , under an agreement concluded in 1972 ,
the military bases occupied by the British Admiralty and NATO will be
finally vacated as from 1979 *
                                                   2
        lhe Republio of Malta covers barely 320 km . find oomprises four islands *
of which only Malta and Gozo are inhabited# The island 's only natural wealth
is in the form of quarry stone , and the search for oil undertaken off the
coast has so far proved fruitless.    The Mediterranean climate allows the
cultivation of cereals , vegetables and flowers , plus a little arborioulture,
but the shortage of water resources restricts the potential of the agri­
cultural sector.
        The country has a transport infrastructure whioh is generally
considered adequate.   The road network links all the inhabited areas .  The
airport , which is of crucial importance   for the development of tourism , is
situated at Luqa and the runway has recently been extended to take all
types of long-range aircraft .   A national shipping oompany and a national
airline were established in 1973 and 1974 respectively.
                   2.  POPULATION   AND  EMPLOYMMT
        The population of Malta has remained constant around the 320 000
mark for more than ten years .   The population density is extremely high
 (l 000 inhab./km ) and 90$ of the population lives on the main island*
The capital , Valletta, has only 14 000 inhabitants#
        The traditional trend of emigration , which reached a peak in 1974
 (net emigration of 3 700) was suddenly reversed in 1975 and over
 the last two years the number of people returning haB been 2 700
 greater than the number of departures . This phenomenon and the
 arrival of large numbers of yound people on the labour market have
 contributed to the net increase in the labour supply*
 ---pagebreak--- which totalled 115 000 in 1976 compared with 100 000 in 1969      •
Thanks mainly to the creation as from 1972 of special corps of
workers ( Pioneer Corps ) raid from the State "budget and generally
employed on major infrasx .-ucture works (approxi lately 8 COO people ),
the number of persons in employment increased from 95 000 in 1969
to 110 000 in 1976 } this measure and the raisir„ of the school-
leaving age explain the apparently low rate of unemployment - 3»3
of the working population in 1976 .
         The breakdown ox xne working population by sector has undergone a
profound change since 1969 ( see Annex l ) t mainly in favour of manu­
facturing industry ( 25$), in which the 10 000 new jobs have partially
compensated for the reduction in the numbers employed on the British
military bases (7 800 in 1969» 3 300 in 1976 ) and for the redundancies
in the building sector following the boom in the late sixties#      The posi­
tion of private services remains fairly constant with approximately 30$
of the employed working population , while the number employed directly
 in tourism is constantly increasing (3 800 in 1975f 3.4$ of the employed
working population).
                 3. ECONOMIC OBJECTIVES OP THE PLAN
          Up to the end of the fifties, the Maltese economy was geared entirely
  to the needs of the British military bases. These accounted for approximately
  50f0 of the island's GNP and provided jobs for almost 2% of the working
  population. The Government has since been endeavouring to restructure
  the Maltese economy in order to make up for the loss of revenue and
  employment brought about by the progressive withdrawal of the British troops.
  All the plans drawn up since 1959 set out to develop highly labour-intensive
  manufacturing industries , to extend tourism and strengthen agriculture.
          In the most reoent plan covering the period 1973-80, the planners*
  objective was to create 20 600 new jobs in order to compensate for the
   effects of the shutdown of the military bases in 1979* The faster than antici­
   pated increase in the working population (115 300 in 1976 compared with the
   111 800 forecast ) and the redundancies brought about (approximately 1,000)
   or envisaged (particularly in the textile factories) as a result of the
   crisis in international trade have obliged the State to revise its objectives
                   4
   (1) on the basis of the nwber of persons over si*te<m years of age >*o
       have a job or are in search of a job .
 ---pagebreak---                                               - 7 -
              TABLE 1 : AVERAGE ANNUAL GROWTH AND SECTORAL DISTRIBUTION OP '.'DP
                      ENVISAGED BY THE 1973-60 PLAN (original version ) v .
                                ( in  on baeia of 1972 prices )
                                                      Antioipatea
                                                                  Γ"–
                                                                  1   ι- « _ χ ι .3 -
                                                                                      ■ ν..Α Α ..
                                                                      böotoral dietributioi
                                                                                                  1I
                                                       aimua"'
                                                       avérée e         * 972           1979
                                                       growth
 I . Agriculture and fisheries                            4-° .   Γ7 7.5                  <-7
J Industry (including shipyards)                        11.6 ■          24.6            36.3
I    Publio undertakings                                  5.5              4.9            4.9
   . Construction and quarrying                           0.0              4.9            3.4
J Tourism and private services                          12.4               5.9 v          9.2
J Provision of services for the military bases         -31.4               6.3         . °'3
!    Public administration                          I     3.2           16.1            13.7
     Other services                                       3.2        . 29.8             25.5
     GDP at factor cost                                   5.5         100,0           100.0
     Source :  Offioe of the Prime Minister :   Outline of development plan for Malta-
                                                1973-1980 (August 1973 )
                           4
 ---pagebreak---                                   - 8 -
j ;: 'C®5 the 1&tter years of th« Plan, with the result that /or the
      period 1977-79 a total of 23 700 new jobs will have to fee created to avoid
      an increase in the current level of unemployment. To at iin thia objeotivr ,
      Malta will have to invest £M 240 million over this three year periodt
      approximately one half of which will be payable, in foreign currenoy. This
      additional effort should make it possible to increase GDP by 7,50% per
      annum, most of which will be accounted for by manufacturing industries
      (added value of the sectors + 19-5$ per annum) geared towards exports
      (total volume of exports : + 26$ per annum ) in order also to achieve
      equilibria* in the balance of current pavaents a3 TTGB. 1990«
                         4 » HE CENT TRSND OP THE ECONOMIC SITUATION
(a) Growth and origin of the national product                         \
             In 1976 Malta 's GNP was the equivalent of f, 530 million# Per
      capita GNP for the same year was therefore approximately $ 1 700, a
      figure comparable to that recorded in Portugal , for example#
             Since the early sixties , the Maltese economy hag experienced
      alternating periods of stagnation and rapid growths
             Table 2 : Annual average growth of GNP fin real terms )
                             1960-65 :           0.3%
                             1965-70 :          10.3%
                             1970-72 :           4.2%
                             1972-76:^          15.5$
                  For 1976 , on the basis of the rate of GDP growth
   After a severe economic crisis provoked by the' reduction in the British
   military presence beginning in 1959i "the introduction of investment subsidies
   and of tax exemptions facilitated the development as from 1975 of manufacturing
   industry ( +16$ per annum between 1965 and 1970 ), nhile the extension of thf
   tourist sector ( revenue : +36$ per annum ) brought about a similar expansion
   in the building and services sectors. The reduction in the number of tourists
   in 1970 , the oollapse of property speculation and lastly the provisional
   abolition in 1971 of the tax advantages for new undertakings combined to
   put a brake on the growth of economic activity up to 1972#
    For 1976 , on the basis of the rate of GDP growth .
 ---pagebreak---                                TABLE 3 s STRUCTURE OP GDP BY SECTOR OP ORIGIN
                                     ( in %. on basis of current prices )
                                                      1965  .•    !    1969    1972  1975  1976
                                                             1 1 ■!
Agriculture and fisheries                               7.5         I   7.4     7.5   6.0   5.4
Manui actunng industry                                 19»3            22.4    24.6  30.5  33.1
Construction and quarrying                              5.5             6.8     4.9   6.0   5.8
Publio undertakings                                     3.9             4.6     4.5   3.9   3.4
Transport and communications                            4.6             3.8     3.3   4.4   4.6
Public administration                                  13.3            13.8    16.1  14.6  14.4
Provision of services for the military bases           11.8             7.7     6.2   4.2   3.2
Other services                                         34.1            33.5    32.9  30.4  30.1
GDP at factor cost                                    100.0           100.0   100.0 100.0 100.0
 Provi6ionai data
2_
 Inoluding shipyards
Sources   Central Office of Statistics
 ---pagebreak---                                         - 10 -
             The growth rate did not start recovering until 1973 (GDPJ +10$)
     thanks to acceleration of the Sts'-e investment program® > and the development
     of exports of goods and services (+29$ in 1973 , . +20$ on average between 1973
     and 1976), these exports consisting mainly of processed agricultural products,
     ready-made clothing and tourism . The objectives of the Plan for 1973-60 have
     therefore been exceeded comfortably for the first four years , since the
     annual average growth of GDP has been 16$ compared with the Initial target
     of 5,5$. As shown in Table 3, this acceleration is due essentially to
     manufacturing industry, which now accounts for a third of GDP compared with
     only a quarter in 1972. Services remain, however, the principal seotor of the
     Maltese economy ( 52$ of GDP in 1976 ) despite the progressive reduction in thh
     services provided for the military bases ( 3$ of GDP in 1976 compared with
     12$ in 1965 ).
(b)  Consumption , savings and investment
             After rising rapidly between 1965 and 1970 , private consumption
     increased only modestly between 1971 and 1973 ( 2.3$ per annum ), suffering
     the repercussions of the si owing-down of economic activity and the temporary
     freezing of the level of civil servants * salaries decided by the State in 1972.
    Over the last three years , in contrast , private consumption has increased
                                      L
    by an average of 8.7$ per annum ; this level remains well below that of the
    extremely rapid growth in national income ( see Table 4)* Since publie
    consumption had followed approximately the Baroe trend, domestio savings -
    the volume of which continued to decline until 1972 (then representing
    less than 2$ of GNP) - were re-established at a more satisfactory level
    after 1974 and represented 17$ of GDP in 1976 . They covered approximately
    43$ of the amount of investments in 1975 and 59$ in 1976 compared with
    only 8$ in 1972. Allowing for the increase in the net income from
    capital invested abroad, for transfers^ ^and capital inflows, resources
    available for financing were well in exoess of the amount of investment
    expenditure ( see Table 5 )*
            After a fairly sharp drop between 1969 and 1972 (-*30$) caused by the
    property crisis and the budget restrictions , the level of gross fixed
    capital formation picked up again rapidly, increasing from 19$ of GDP in 1973
    to 27$ in 1976 (compared with the 25$ target set by the Plan)* This
    recovery is mainly due to publio investment , the volume of which increased appreciably
         Transfers from emigrant workers , rents for the military tases and subsidies
         from the United Kingdom .
 ---pagebreak---                                              TABLE 4 J   STBtJCTURE OP RESOURCES AND 0JPLOYMOTT
                                                                 CM f 000 at ourrent prices                             Struoturo in
                                                 1965           1969           1972         1975           1976      1965        1972      1976
                                                48 283          77 650      100 193      149 183        169 000      91.6                    83.0
Consumption
 - private                                    ( 39 217 )      ( 63 986 )    ( 60 407 )  (118 660 )    ( 135 200)   ( 74.4)     (7 *.7 )    ( 68.4)
 - publie                                       (9 066 )      ( 13 664)     ( 19 786 )   ( 30 523 )     ( 33 800)  ( 17.2 )    ( W.4)      ( 16.6 )
Gross fixed           » ortjv;ion               11 784          25 456        22 533       37  82         54 800     22.3        :V»0        26.9
 m private                                      (7 687 )      ( 18 356 )    ( 16 255 )   ( 19 500) ;I      n*a«    (14.6)      0%9)
 - public                                       (4 097 )        (7 100)       (6 278)    (17 982 )         n.a.  '   (7.7)       ( 6.1 )
                                                 1 683           1 >48         2 967        1 475          3 900      3.2           Λ9        1.9
Variation in bivoks
                                                61 750        104 454       1*5 693      188 140        227 700    117.1       \: i.o      111.8
Gross domestic expenditure
                                                28 377          46 584        53 460     137 327        171 700      53.8        •>- o3      84.3
Exports of goods and non-factor services
                                                37 392          69 042        76 948     159 710        195 800    -70.9       -,'i>.3     -96a
Imports of boods and non-factor services
                                                              -22 458       -23 488      -22 383        -24 100    -17.1       -M.o        -11.8
Resources deficit (-)                           -9 015                                                                                   I
                                                                81 996      102 205      165 757        203 600    100.0       \ vV.0      100.0
Gross domestic product                          52 735
Erternal revenue of factors
Eictemal expenditure of factors
                                                 4 261
                                                                 9 949
                                                                -3 423
                                                                              12 448
                                                                              -4 H9
                                                                                           23 880
                                                                                           -5 623
                                                                                                          19 200      8.1
                                                                                                                                  ' -.2
                                                                                                                                  -4.0 *    | 9.4
                                                                88 522      110 534      184 014        222 800    108.1        UN5.2      109.4
Gross national produot                          56 996
   Provisional estimates
 Sources ! - Central Office of Statistics , Malta: Annual abstract of Statistics. 1975
           - Data for 1976 supplied by the Maltese administration
 ---pagebreak---                                                    TABLE 5 S FINANCING OP INVESTMENT
Γ                                                                 In   M • OOO at current; prices                                Structure in %
                                                  1965            1969            1972         1975               1963     1965           1972    i  1976
I                                             L_                                                               Estimate                                      rJ
I (-) Investment                                13 467          26 804          25 000        38 957             58 700   100.0         100,0       100.0
      of which :
I     – Gross           cap*.'i-dl .Tcnnation   11 784          25 456          22 533        37 482             54 800    87.5           88.4       93.4
      - private                                  (7 687       ( 18 356)        (16 255 )    (19 500)           ( 25 200 ) ( 57.1 )      (63.7 )     (42.9 )
      – public                                   (4 097 )       (7 100)         (6 278 )    ( 17 982)          ( 29 600 ) ( 30.4 )      ( 24o6 )    ( 50.4 )
      – variati ;..* in                           1 683          1 348            2 967        1 475              3 900     12.5          11.6         6.6
  (+) National savings :                          8 719         10 872          10 341        34 831             54 800     64.7         40.6         91.6
      of which :
      Domestic savings                            4 452          4 346            2 012       16 374             34 600     33.1            7.9       58.9
I     - private                                                 (2 371 )        (1 817 )    (14 622 )             n.a .                   ( 7.1 )
I     - public                                    n.a .         (1 975 )           (195 )      1 952 )            n.a .                   (0.8 )
      Net revenue from abroad                     4 261     I    6 526            8 329       18 257             19 200     31.6          32.7        32.7
      Resources deficit (-) or surplus (+1       -4 754       -15 932          -15 159        -4 126             -4 900   -35.3         -59.5         -8.3
      External Financing
                       (1 )
      Net transfers v     '                       6 303         10 268          24 787        29 178             31 900    46.8           97.8        54.3
                                                                                                                                     1
      of which , transfers from emigrant      1
          Maltese workers                          (913 )       (5 433)          (5 244 )     (6 275 )         (10 400)     ( 6.8       ( 21.1 )    (17.7 )
      Net capital inflow                            716         -2 341          19 612        14 401              n.a .      5.3         76.9
                                              I
      Variation in external assets            I
      ( increase s - : decrease s +)            -2 265    .     ♦8 005         -29 240      -39 453        I      n.a .   -16.8        -114.7     L_iJ
      (1 ) Including rent for the military bases after 1972 .                             Sources :    – Central Office of Statistics , Malta t
                                                                                                         Annual abstract of Statistics , 1975 .
       ( 2 ) Including balance of payments errors and omissions
                                                                                                       – Data supplied by the Maltese administration.
 ---pagebreak---                                          - 13 -
          mainly as a result of direct State participation. in indur>rial
          projects* Private sector investment , however, declined by 12$ in real
          value terms between 1973 and 1975 as a result o; the international economio
          climate and despite the introduction of favourable tax measures f6r firms
          in the industrial and tourist sectors .     This trend seems to have been
          reversed in 1976 (+29$ at ourrent prices ) to judge by the considerable volume
          of capital goods imported to start up new factories# Is 1976 , however, private
I         investment accounted for only 46$ of gross fixed capital formation compared
          with 72$ in 1969 and 1972 .
    _ .                      .                                                 V
  ( o ) Public finance ( see Table 6 )
  )     •
                    Since 1969» Government revenue has increased much more rapidly than
          the national income ( 33$ of ONP in 1969, 49$ in 1975) t        t*"-8 more thaa
          proportional increase is due essentially to the payment of the rent for the
          British military bases and to the accompanying grants from other NATO countries
          ( 10# of ONP).
                      As regards other items of revenue , there has been a marked
             reduction in the proportion represented by customs duties (47$ in
             1969 , 21$ in 1975 ) » no doubt connected with the tariff reductions
             granted to the EEC countries since 1971 *    The recent increase in
             the profits earned by the Central Bank on its financial investments
             abroad (6$ of current revenue in 1969 » 10$ in 1975 ) roay, however, be
             considered a temporary phenomenon insofar as it is linked to the
             accumulation of surpluses , particularly in foreign currency, derived
             from the rent for the bases .
                      The current expenditure entered in the State budget has
             increaeed on average at the same rate as CfNP since 1969#     The increase
             in the price of raw materials on the international market caused the
             Government to triple the amount of the subsidies on essential products^
             between 1973 and 1975 * These subsidies ( 9$ of current expenditure) are
             to be progressively abolised.
              (l ) Food oils , condensed milk, flour, pasta and bread * sugar.
 ---pagebreak---                                               TABLE 6 t GENERAL STATE BUDGET - (1969-76 )
                                                                     In M '000                         As % of revenue
    Period from 1 April to 31 March                budgets implemented                 budget voted  1969/70      1975/76        1976/77
                                                                                                                                proposed
                                            1969/70         1972/73         1975/76       1876/77                                 budget
I Revenue                                     24.0             47.8            81.6          83.9     100.0         100.0   [     100.0 1
[ of which :
j Rent for the military foa6ee          j     (-)            (13.5 ) .       (13.5 )       (13.5 )      (-)       ( 16.5 )        (16.1 ) I
      Profits of the Central Bank       |     (1.5 )             2.4 )       ( 15.1 )      ( 15.0 )     (6.3)     (18.5 )         ( 17.9 ). !
      Tax on incomes and estate duty          ( 3.3 )          ( 8.5         (14.4 )       (15.4 )    (13.8)      (17.7 )       . (13.4) I
I     Customs duties                         (11.4 )         ( 12.8)         ( 17.1 )      (17.2) .   (47.5 )     ( 21.0 )        ( 20.5 ) 1
I Current expenditure                         23.7             33.4            57.6          63.3       98.8        70.6            75.5
I     of which :
I     Subsidies on essential foodstuffs        (1.4 )            1.6           ( 7.1 )       ( 6.6      ( 5.8)      ( 8.7 )         (7.9 )
    Balance                                     0.3            14.4            24 oO         20.6         1.2       29.4            24.5
I (Balance , excluding the rent for
I the bases )                                  (0.3 )          (0.9 )        (10.5 )         ( 7.1 )      1.2     ( 12.9 )          ( 8.5 )
    Capital expenditure                          9.8             8.8           36.5          32.8      40.8         44.7            39.1
      of which :
 I Repayment of debt                           (0.3 )          (0.5 )          (0.3 )        ( 0.3 )      1.3       (0.4 )    .     (0.3 )
 I    Investment                               ( 9.5 )         ( 8.3 )       (36.2 )       ( 32.5 )   ( 39.5 )    (44.3 )         ( 38.7 )
 I Overall balance                     H      -9.5               5.6         -12.5         –12o2      -39.6       -15.3           -14.6
    Local borrowing                              9.5                                                    39.6
    External grants and loans                                    2.1             6.7           5.7                    8.2             6.8
    Variation in Treasury assets                               +7.7            -5.8          -6.5                   -7.1            -7.8
   Source x  Ministry of Finance 1 The Malta Financial Report
             Data supplied by the Maltese authorities
 ---pagebreak---                                       - 15 -
            Most of the State "3 capital expenditure takes the form of fixed
    investments ; according to the 1975-76 "budget , almost 60$ of the total
    aid to the acquisition of holdings in producti'3 investments (shipyards ,
    industry, tourism) and 25$ is for infrastructure works# The State takes
    an active part in getting new industrial activities under way, in parti­
    cular "by establishing industrial zones equipped with the necessary infra­
    structure , and sometimes even with factory buildings j or "by itself
    launching new undertakings (in the textile industry for example). This
    approach is continued in the 1976-77 "budget , which will probably devote
     M .5 million to shipbuilding and M 10 million to industrial projects .
                                                                     \
            The rent paid for use of the military bases provides a current
     net budgetary position which covers approximately two-thirds of capital
     expenditure , but the rapid increase in the latter ( M 14 million in
     1974/75 and then M 30 million in the following two years ) has given
     rise to a considerable overall deficit (% of GNP in 1976)# The
     grants and loans obtained by Malta on very favourable terms have
     not been sufficient to finance this deficit , with the result that
     the State has had to draw on the reserves accumulated previously
     with the Central Bank#
(d) Currency, credit and the banking system
             The characteristic feature of the trend of Malta 's currency
     situation is a steady increase in net foreign assets , which is the
    main cause of the expanision in the money supply ( see Table 7).
    Approximately 37$ of this is held in the form of notes and coin and
    more than 50$ is held in the form of deposit and savings accounts at
    3$ or 5$ per annum. The inflow of budget revenue from the rent for
    the military bases explains the low level of claims on the Treasury,
    The amount of credit to the private sector, which quadrupled between
    1966 and 1972 mainly as a result of the construction boom, has since
    stabilized. Up to 1967 the external assets were held mainly by the
    commerical Jbanks , which have since been obliged by the Government to
    repatriate their financial assets , with the result that the Central
    Bank now holds 85$ of them.
 ---pagebreak---                                       TABLE 7 : MONEY SUPPLY AND MAIN COUNTERPARTS
                                                    (1969 - 1976)
                                               I                        In   M million                          !I  As % of total money ]
                                                                                                                         BUT) ply           J
                                                              ( end of period )
                                                                                                                 i
                                                                                                                 i                         η
                                                   1969          1972           1974.  II     1975       1976        1969          1976     I
I Money                                            56.4          76.5           93.1       117.1        144.5       41.7           45.0     |
I  of which notes and coin                       (40.9 )        (62.4 )       ( 79.5 )      ( 98.8)   ( 119.6 )    ( 30.2 )       ( 37.3 )
| Quasi-money                                      76.8         114.9         127.2         148.0      176.4         58.3           55.0
  Total money "nppl ;                            135.2          197.4         220.5         265.1       320.9      100.0          100.0     |
I External assets (net )                         100.3          132.9         174.5         228.6       286.6        74.2           89.3
I of which: held by the Central Bank             ( 58.5 )     (103.4 )      ( 130.7 )     ( 183.4 )   ( 237.8 )    (43.3 )        (74.1 )   !
I Claims on the Treasury (net )                     6.8          14.6           12.9          12.9       22.1         5.0            6.9
I Claims on the private sector                     38.2          54.7           55.9          53.1       56.5        28.3          17.6
j Other items (net)                              -10.1          -10.8         -23.0         -29.5   I   -44.2        -7.5         -13.8
  Total counterparts                             135.2          191.4         220.3         265.1       320.9      100.0          100.0
  Source : Central Bank of Malta : Quarterly Review , March 1977
 ---pagebreak---                                - 17 -
            On the other hand , the commercial "banks hold considerable
    liquid assets given the low level of demand frr credit • n Malta , with
    the result that their average liquidity ratio is around 50% to 55#
    even though the legal minimum is only 25
             Tie Central. ~-gr> «? Vv         is.            \ : :.-.3 r-;l5 as "car>
                                     T:itT«î.sr.T = âTii îrjîrr.iïé trs
     of the other banks ; it is the Government 's financial agent#               The
     tanking system also comprises three commercial "banks , two savings banks ,
     three long-term financing institutions^ and lastly two "bodies to
     manage the funds of foreign residents .
                                                                                 V
( e ) Prices and wages
              The only index recording price variations is for retail prices ;
       it shows a relatively modest increase in prices since I960 with the
       exception of the period 1973-75 » when there were sharp increases in the
       prices of imported products .      However , this index is of little signi­
       ficance given that the State was maintaining a system of subsidies for
       essential products .    Their progressive abolition will probably bring
       about an increase in the cost of living of at least 3$.
              TABLE 8 t AMTJAL INCREASE IN THE RETAIL PRICE? INDEX
                          ( in $, base I960 until 1974 » base 1974
                                          thereafter)
            1969    1970     1971   1972       1973     1974    1975       1976
            2.4     3.7      2.5    3.2        7.8      7.3      8.8       0.6
               Between 1969 and 1976 the minimum wage in the public sector
       more than doubled . Since April 1976 it has been the equivalent of
       approximately 145 u.a .     In the private sector , wag© increases follow
       more or less those obtained in the civil service .             The minimum wage
       is 125 u.a« Per month .    The legal minimum wages seem to have increased
       more rapidly than the average wage .
         See page 24 .
 ---pagebreak---                                       - 18 -
(f ) External trade and th" "balance of payments
            The scarcity of natural resources ant the size of the country-
     oblige Malta to import most of what it needs . Even as production
     increases , the proportion of imports tends to rise and imports of goods
     and services , which accounted for only 6l$ of gross domestic expenditure
     in 1970 , accounted for 85$ of that expenditure in 1975 .
            The trade balance is traditionally in deficit .    This deficit     1
     began to narrow as from 1970 . Whereas throughout the sixties exports
     covered only about one-quarter of imports , this . ratio increased to
     29$ in 1971 » 47$ in 1972 and 51$ in 1973 * The increase in the price
     of raw materials and above all the recession beginning in 1974 on the
     main export markets brought about an increase in that year of 60$ in
     the trade deficit (at current prices )} this deficit increased further
     in 1976 to reach the equivalent of US $ 200 million*
            The structure of imports ( see Annex 3 ) broken down by products
     has changed appreciably in favour of semi-finished products , textile
     fibres in particular , relecting the growing importance in the economy
     of export -oriented processing industries#   Semi-finished products thus
     accounted for 31$ of imports compared with 21$ in 1967 *
             The structure of exports ( see Annex 4 ) still reflects the pre­
     dominance of textile products ( 20$ of exports in 1962 and 62$ in 1975 ) »
     but within that category, yam and woven fabrics now represent only 7$
     of exports compared with 55$ for made-up articles . Other exports consist
     of Malta 's main items of agricultural production and goods from the newly
     established industries ( plastic articles , toys , electronic components ,
     rubber goods , pasta). Exports of finished products now account for 76$
     of the total compared with only 33$ in 1967#
             The breakdown of trade by country of origin and destination' shows
     the preponderance of the countries of the European Community (65$ of
     imports and 68$ of exports ). The loosening of the links with the Uhited
     Kingdom is reflected in a reduction in that country 's share of Malta 's
     overall external trade ( see Annexes 3 and 4 )«
 ---pagebreak---                                                    TABLE 9 - TREND OF THE BALANCE OF PAYMENTS (1970-76 )
                                                                  ( in M«000 )
                                           1970             1971              1972        1973           1974        1975         Jan.-Sept . I
 - Expo. '.s ( fob )                      17 103 ,         19 089           28 414       40 275         59 723      69 199          79 900
 - Imports ( fob)                         59 931           58 252           59 852       78 886       121 937      129 521         112 600 I
 .rade Balance                      J   - 42 828        - 39 163          - 31 438     - 38 611      - 62 214     - 60 322        - 3270Ô 1
 - Travel , tourism (net )                 7 769            8 308            5 874       13 139         18 853 .    23 491          17 500 I
 - Transport                            -  4 957        -   5 253        -    6 036    -  7 203      -   7 606    -  2 042    | •• 1. 600 |
 • Investment ir       .3                  7 278            7 498             8 329       7 507         12 465      18 257          16 300
 - Government revenue                     13 190           12 751             8 990      11 656         14 146      18 859          10 200 I
 - Other services                       -  1 592        -   1 841               878    -  1 691      -   1 202    -  2 369    I - 3 000 I
 • Private transfers                      11 526           10 446             8 569      10 332         10 282      11 534           8 500 I
 - Public transfers                        7 314            9 661           16 218       18 128    I    20 341      17 644          13 600 ]
 Balance on invisibles                    40 528           41 570           41 066       51 868         67 280      85 374          61 500
 Jalance of payments on current         -  2 300            2 407             9 628      13 257          5 066      25 052          28 800
    account
 • Net capital inflow                      6 373            1 204           18 905     -  1 306          6 648      14 401   Π           π
 • SDR allocation                            700              713               707                                             <    7 000
 • Errors and omissions                    2 868      j
                                                      I
                                                            3 494       -     1 067       2 610          4 531       4 352   ij :
 let variation on reserves             -   7 641        -   7 818       -   28 173     - 14 561      - 16 245    - 43 805          -35 800
    ( increase :     decrease : +)
   Including shipbuilding and ship repair work and re-exports ( fuel for ships , oil exploration equipment stored on a temporary basis )*
  Rent for the military bases , sales of goods and services to the bases and to those serving on them , wages of Maltese working on
      the bases .
^ Mainly transfers from emigrant Maltese workers .
   Mainly subsidies from the United Kingdom for the creation of new firms#
   Estimates .                        .      -   .
  •urce :  Central Office of Statistics , Malta: Annual Abstract of Statistics (1975 ) and data supplied by the Maltese authorities .
 ---pagebreak---                                   - 20 -
             The scale of the transfers and the development of tourism have
     made it possible to maintain a positive balance cf payments on current
     account since 1971 .    :he ( net ) revenue fron tourism is sufficient in
     sufficient m itself to cover approximately one-thin, of the trade
     deficit ( M 12.6 million in 1976 ), this re\ nue havi- : trebled
     between 1970 and 197%      The main source of invisible, urnings is
     still the direct revenue ( rent of approximately M 1/j million since
     1972 ) resulting from the British military presence , % ?. which can be
     added the wages of the workers employed on the bases and the services
     supplied to the Admiralty .     This source of revenue id due to disappear
     completely in 1979 1 which explains the Maltese authorities' priority
     concern to develop other sources of foreign currency earnings .
                                                                      V
             Net private investment has followed an irregular trend since
     1970 , amounting to M 5*8 million in that year and M 13.7 million in
     1975 .  The other capital transactions consist of State borrowing ,
     generally on very favourable terms , and of short – or medium-term loans
     made abroad by the commercial banks , the two items approximately can­
     celling each other out .
             The positive balance of payments on current amount and the net
     inflow of long-term capital has brought about a regular increase since
     1970 in Malta 's gold and currency reserves , which stood at ^ 500 million
     at the end of 1975 and $ 620 million in December 1976 . These reserves
      should facilitate the transition period following the loss in 1979 of
     the revenue from the bases and will make it possible to cope for a number
      of years with the balance of payments deficit on current account which
     will result .
( g) External debt
             Malta 's external public debt has remained relatively low since
      independence . In March 1976 it totalled US ft 40 million.
            TABLE 10 : PUBLIC EXTERNAL DEBT ( PART PAID ) AS A PERCENTAGE
                         OF t:s GDP1 for the year in q.^tton ( as at 31
                         KARCH OF EACH YEAR ):
             1970    1971      1972      1973    1214    1221   1221
             11.4     13.3      6.9       7.7     7.1     δ·3     8.1
    1 At market prices .
 ---pagebreak---                                        - 21 -
             The de"bt to the People 's Republic of Jhina aocounts for approxi­
      mately a qurter of the total .    The other main creditors are the United
      Kingdom (15%), Saudi Arabia (13f°)t Italy (10$), Germany (1%) and Libya
      (7%).
             Malta generally obtains very favourable terms from its creditors#
      The concessional element of the loans and grants obtained between 1971
      and 1974 averaged 94      At the end of 1974 » 45% of the totalv debt had
      maturity dates more than ten years off#     Malta hae thus been able to
      keep the cost of servicing its external debt at an extremely low level#
             TABLE 11 : DEBT SERVICING AS A PERCENTAGE OF EXPORTS OF GOODS
                          AND NON-FACTOR SERVICES
             1967    1968    1969   1970    1971   1972   1973   1974    1975
       #      1.3     1.4     1.7    2.0    12.41   0,7   0.5     0.8    0.72
 Due to an early repayment .
^Estimate.
 ---pagebreak---                                         22
                          5 . SITUATION IN THE MAIN SECTORS
(a) Agriculture ard fisheries
             Agriculture employs only just over 6$ of the working population, 4
    more than half of the farmers being over 50 years old. The small area
    available , the arid nature of the soil and shortage of rainfall explain
    the limited role of this sector in the national economy. Domestic agri­
    cultural production accounts for only around 5$ of GDP and supplies only
    about a quarter of the country's food requirements#
             Arable land covers two-thirds of the country, but the area under
    cultivation is constantly declining (-15% between 1968 and 1975 ), mainly
    as a result of the extension of urban areas .     The area under Cultivation
    covers 12 000 ha or a little less than 40$ of the country's total area.
    Only 600 ha are irrigated. The farms are too email , 90$ of them consisting
    of less than 3 ha ; the national average is 1.1 ha , a figure that is still
    tending to decline. More than two-thirds of the farms are tenant farm6 ,
    the State and the Church each owning approximately a quarter of the arable
    land .
             Since independence , the main objective of the State 's agricultural
    policy has been to limit the number of farmers leaving the land so as not
    to accentuate the problem of employment at national level . The State has
    tried to extend the area that can be cultivated by means of dams and water
    distribution schemes . In April 1976 a major project was launched to recover
    abandoned arable land and establish model farms . The price of seed , fertil­
    izers , pesticides and fodder , as well as the operating costs of the irri­
    gation installations , are subsidized . A large amount of aid and interest
    rate subsidies are granted for the irrigation work and the agricultural
    equipment .
             As a result of this encouragement , the added value of the sector
    has increased by an average of 11$ per annum at current prices ( compared
    with 13$ for GDP as a whole over the last ten years ). This overall growth
    has been accompanied by a marked increase in agricultural productivity as
    a result of the development of crops requiring a greater degree of expertise .
    Despite this restructuring work, the agricultural trade balance remains
    heavily in deficit and exports cover only 32$ of imports. The Government
    controls external agricultural trade and is trying out numerous promotional
    activites . It, ad so regulates purchasing operations , particularly of
    cereals and fodder .
 ---pagebreak---                The fisheries sector is still on a very small scale ; there
     are approximately 500 fishermen on the island providing approximately
     three-<ruarters of fish supplies . The annual latch doer not exceed
     1 500 t .
(b) Manufacturing industry (not including shipya: is )
               Maltese industry is heavily dependent on sell??g on foreign
     markets . In 1976 , 58$ of total production was exported , and 80$ of
     textiles and made-up clothing#       Manufacturing industry has grown very
     rapidly over the last ten years , at around 9*5$ per annum in real
     terms • In 1976 this sector accounted for 29$ of GDP compared with
     18$ in 1964 » Manufacturing industry employs 28 000 people , i.e. , 25$ of
     the employed working population compared with 17$ in 1964 * The estab­
     lishment of new firms , generally financed by foreign capital , is largely
     responsible for this rapid development .
               The most important branches are those which provide proportionally
     the greatest added value and use a lot of labour.       The industries producing
     foodstuffs , textiles and especially made-up garments (mainly jeans and
     babies * clothes ) employ more than half of the population working in
     industry and account for 56$ of industrial added value. The metal con­
      struction industry ( cranes , drydocks ) and the other metal processing
     and assembly activities also provide more than 20$ of industrial added
     value .
               The size of firms is still generally modest »    The ten largest
      firms employ an average of six hundred people btrt almost three-quarters
      of the firms have five or fewer workers .
               Table 12 : Breakdown of industrial firms by numbers employed
                       ■  in 19752                    '
                                bet ween 1 between 50 between 100 More than     T0TAL
     Number of paid workers : and 49       and 99       and 299        300      –mmm
      Number of firms :          . 2 499         54         47           10     2 606
■'■Based on the production indices - see Annex 7 *
2~                .  '
  Source : communicated by the Maltese authorities .
 ---pagebreak---                                     - 24 -
             Foreign firms are attracted to Malta by numerous tax incentives
    introduced as early as 1959*« Foreign firms enjoy accelerated amorti­
    zation arrangements , tax exemptions on re-invested profits and low-rent
    industrial promises . The relatively low leve1 of wagee - probably lower
    than those in Spain or even in Greece - a good level ox skills acquired
    on the military bases and a social consenus based on an agreement between
    the Government and the General Workers 1 Union are further incentives for
    the decentralization of European units of production#                     J
             The Malta Development Corportion (MDC), which was established in
    1967 t is responsible for implementing the Government 's industrial policy#
    The KDC , which has a capital of V. i aillion , is whollv ovnei cv ihe
                                                                   V
    State# It assesses the applications from new firms and decides on the
    tax benefits they are to enjoy , it provides them with technical assistance
    and with the auxilliary services they require . It can also run the firms
    controlled by the State (the State has a 100$ capital holding in ten or so
    companies and a majority shareholding in some twenty others ) or can acquire
    holdings directly (the MDC has a majority holding in ten joint ventures
    and a minority holding in ten or so others)#
             Three other bodies set up more recently are also responsible for
    assisting the establishment of new industrial firms# These are :
    (a) the Investment Finance Bank, set up by the State in 1976 with
          the participation of Libyan and Italian capital , which grants
          loans at interest rates not exceeding 8% per annum ;
    (b) the Small Scale Industries Development Centre, the task of which
          is to assist firms with a staff of less than fifty;
    (c) The Libyan Arab-Maltese Holding Company Ltd# , which, with a
          capital of M 3 million provided by the Maltese and Libyan
          Governments , is intended to promote the industrialization of
          the two countries , and of Malta in particular#
 There are at present about one hundred foreign firms#
215$ tax on profits instead of 32.5$
 ---pagebreak---                                  - 25 -
                                                                        »
               In 1974 and 1975 the rate of establishment of new firms seems
      to have slowed down , a number of large factories reduced their staff
      and others avoided this thanks only to the aid supplied by the State
      in exchange for the preservation of jobs .   The export markets picked
      up again in 1976 and thus, led to a recovery in industrial activity.
      However , the number of jobs created is still insufficient , particularly
      in view of the new data on the working population (see page 5 )* Accord­
      ingly , the State amended the initial forecasts of the Plan and establised
      the objectives of creating 12 000 additional jobs^ in industry during the
      period 1977 "to 1979#  It will be difficult to achieve this extremely
      ambitious objective , since the number of jobs created Since 1971 by new
      industries has averaged 1 400 per annum .                         v
( c ) Shipyards
               Grouped together in the Malta Drydocks Corporation , the shipyards
      employ 5 200 people ^ that is 5$ of the labour force in employment , their
      added value accounts for 4% of GDP and they provide approximately 20$ of
      total exports .
               The shipyards were nationalized in 1959 by the British Government
      and were thereafter gradually converted for non-military use .      The Maltese
      Government took control of this industry after 1970 but it is now self-
      managing .
               Although work for the British Admiralty still accounted for 44$
      of turnover in 19M » this work practically dried up after 1970 .      The ship­
      yards also suffered greatly from the repercussions of the closing of the
      Suez Canal (non-military sales : down 30$ in 1968 compared with 1967 ), and
      their operations remained in deficit until 1974 *     With the aid of the
      People 's Republic of China and Saudi Arabia , - the Government has undertaken
                                         2
      the construction of two new docks     However , the serious crisis currently
      affecting shipyards , particularly in Europe , seems to restrict the
      possibilities for extending the Malta Drydocks Corporation.
    Not including those resulting from the entry into service of factories
    already under construction.
2
    One for the repair of ships of up to 300 000 t and the other for the
    construction of ships of up to 120 000 t .
 ---pagebreak---                                    - 26 -
(d) Water and energy
              Malta 's water supply possibilities are limited end urgan and
      industrial development are making it necessary to draw increasingly
      on the underground water reserves which supply almost 90% of the water
      consumed .  Furthermore , the degree of salinity of that water is
      increasing "beyond the normal "beyond the normal level , at least as far
      as the main island is concerned . There is a sea water desalination plant
      on each of the two inhabited islands . These provide 40% of the water
      consumed .  The requirements dictated by the objectives of industrial
      growth reduce the possibilities for developing irrigation and agriculture
      in general and make it necessary to strengthen the measures to limit
      domestic consumtion .                                             \
              Malta has no source of energy.     Oil exploration has been under­
      taken off the coast but has not yet been successful .     Imports of oil and
      coal cost approximately M 14«2 million in 1976 , that is approximately 0$
      of the total import bill or 6% of GNP. Libya grants a reduction on oil
      products of approximately a quarter of their value .     It is proposed to
      make use of solar energy.
              The electricity produced by the thermal power station of the Malta
      Electricity Board amounts to 350 million kWh or approximately 1 150 kWh
      per inhabitant*. Industrial consumtion did not increase between 1972 and
      1975 and accounts for approximately 34$ of total consumtion.               ,
( e ) Transport and communications
              The road network totals approximately 1 200 km , of which        is
      surfaced ; the network links all the inhabited parts of the island and
      appears to be adequately developed .    Buses provide a satisfactory service
      between town .
              The airport at Luqa is being extend to take large-capacity air­
      craft . The number of incoming passengers in 1975 was 376 000 , that is 95$
      of the arrivals on the island .    Air Malta , which was set up in 1974 by "the
      Government and foreign shareholders , carried 230 000 passengers in 1976 .
  Compared with a per capita figure of 3 850 kVfh in the EEC in 1974 *
 ---pagebreak---                                     - 27 -
                Port traffic , mainly through Valetta , is fairly intense ; in
      1975 i imports totalled almost 5 million t . Sea Malta , established in
      1973 » has five cargo ships , and carried 130 000 of good ", in 1976#    It
      links a , number of European ports and is trying to specialize in the
      transhipment of goods intended for other particularly congested Mediter­
      ranean ports .    The transport infrastructure projects envisaged by the
      Government include the construction of a second major international port
      in the south of1 the island#    This port would specialize to some extent in
      the transhipment of containers .
                Since. 1975 telecommunications have been run by the Telemalta Cor­
      poration , which is currently beginning a vast extension programme whose
      total cost is estimated at M 13 million over three years .        v
( f ) Tourism
                This sector employs almost 4 000 people directly.    Although it
      contributes between 1% and 8$ of GDP , gross foreign currency earnings in
      1976 were M 28.6 million or the equivalent of 36% of merchandise exports .
      The number of tourists visiting Malta was 340 000 in 1976 compared with
      only 16 000 in 1966.
                Since 1959 the State has offered hoteliers numerous advantages .
      For the construction of hotels of at least eighty beds the State supplies
      capital in the form of subsidies representing on average 28$ of the con­
      struction costs and offers tax exemption on the income for ten years .      As
      a result of these measures , hotel capacity increased from 1 900 beds in
      1959 to 6 300 in 1968 and 9 800 in 1976 .
                The State is trying to encourage diversification of the tourist
      clientele and extend the tourist season.     It has encouraged cruise tourism
      and the organization of international conferences#      The hotel occupanoy    "
      rates are considered satisfactory. However , 40$ of the visitors still stay
      in Malta during the three summer months , a percentage that has not changed
      in ten years .
 ---pagebreak---                                                               - 28 -
                                                 6 . SHORT- AMI MEDIUM-TERM PROSPECTS
                    The directives of the Plan , as revised at the beginring of 1977
( see page 6 ), set as their priority objective the creation of 23 700 new
 "■ Γ:"*"
    ^
          Ρ
          Β
                  **·· -ν* ρ» ♦*»·
              Α ^-4» Α ·
                                   ο ■•".Λ
                               * ·– ^
                                           "»*-*
                                      Μ – Β «»     Α
                                                       -^ 7 –
                                                     ^ ^
                                                               _I ·*«·-·  «
                                                                   « »■ » Μ «* ν β
                                                                                   β *^ «·■«»'*
                                                                                        Μ.
                                                                                                «τ
                                                                                                 I
                                                                                                   -^ Λ^ -^ ν*4
                                                                                                            I
                                                                                                                ** Α *» § Τ, γΛ ^
in the rate of raerr.pl oyment vat present approximately 4/£ of the working
population).
                     According to the Government , half these jobs are virtually guaran­
teed :
            ( a) the growth in tourism will create the need for approximately 700
                     new jobs ;
            (b) the new infrastructure projects will employ 2 500 workers (probably:
                     programme to extend the land under agriculture , construction of a
                     new port , etc .);
            ( c ) the two new drydocks of the Malta Drydocks Corporation should provide
                     employment for 1 500 workers ;
            (d ) the increase in the production of industrial firms that have not yet
                     reached full output will create 3 000 jobs , while the factories
                     currently being fitted out will employed 2 400 workers .
            To reach the figure of 23 700 jobs , a further 12 000 will have to be
created between now and 1979 1 probably entirely in the industrial sector#
            Generally speaking , these objectives appear very optimistic ; firstly ,
because the extended shipyards will encounter an'extremely unfavourable
international market situation , and secondly , because the present
international trade situation is hardly conclusive to the decentralization
of industrial capacity from Europe or North America with the intention of
exporting goods back to those same regions , and lastly because investment
decisions and their practical implementation generally take too long for
there to be any chance of 12 000 new jobs being created in three years
 ---pagebreak---                                    - 29 -
("between 1971 and 1975 "the j amber of new jobs created in industry averaged
1 400 per annum , whereas tha Government projects as a whole ippear to pre­
suppose the creation of 5 800 jobs per annum in th-3 industrial sector "be­
tween 1977 and 1979 )* Thus the employment objectives will probably not be
achieved and the rate of unemployment will doubtless rise above the present
level ; it could be as high as lQffo to lj/o of the working population in 1980 .
         As far as gross fixed capital formation is concerned , the State
estimates the volume of investment needed at        M 240 million  between 1977
and 1979 » given the number of jobs it is hoped to create *      As an annual
average , this is 44$ higher than the figure achieved in 1976 . Since this
is mainly industrial investment , it is not certain that Malta has the neces­
sary design and organization capacity to implement rapidly a sufficient
number of viable new projects .      On the other hand , the amount of foreign
currency needed to purchase capital goods should not raise any problems
since , up to 1979 » "the State will have the exception revenue from the rent
for the military bases and the connected revenue derive therefrom .
         After 1980 Malta will be faced simultaneously with two'' problems :
firstly , a rate of unemployment probably far higher than that at present
anticipated , and secondly , a large budget and balance of current payments
deficit , since investment will have to be continued well beyond the date
when Malta ceases to have the revenue from the military bases .       The pass­
age through this difficult transitional period should , however , be facili­
tated by 'the possibility of drawing for a number of years on the abundant
foreign currency reserves : US 620 million at the end of 1976 , that is
the equivalent of seventeen months' imports . Furthermore , Malta has a
number of advantages to help it construct the basis for a balanced economic
development no longer dependent on military bases .        These include :
  The investment cost per new job seems relatively low (approximately
  21 000 u 0a .){ however , all , or at least the vast majority, of the
  investment operations necessary to create approximately 12 000 jobs
  have already been carried out .     Lastly , most of the new investment
  operations envisaged are in light industry.
 ---pagebreak---     1*  a labour force that is skilled ( particularly in mechanical
        engineering) and relatively cheaps
   ii » a favourable geographical location on the route from Gibraltar
        to the Suez Canal ;
  iii « a climate that is favourable for the development of tourism .
    The sucoess of this changeover will also depend to a very large extent
on the re-establishment of a more favourable international economic climate .
It will also depend on the extent to which Malta can obtain effective assist
ance in implementing its industrial strategy , particularly for :
    i.  the selection of export-based inudstries and the identification and
        preparation of projects ;
   ii « the promotion of projects selected with potential foreign investors ;
  iii . the establishment of trade relations and trade links .
 ---pagebreak---                     ν
STATISTICAL ANNEXES
 ---pagebreak---                                            - il-
                        ANNEX 1 : SECTORIAL BREAKDOWN OF WORKEPI IN EMPLf ,'MENT
                                        «             ■              9
                                                    Number                        %
                                             1969          1976           1969         1976
Agriculture and Fisheries                   6.280         7.210            6.3          6.5
Manufacturing Industry                     17.590        27.960           17.5         25.3
Shipyards                                   5.200         5.400            5.2          A. 9
Buildings , construction and
quarrying                                  12.370         4.700           12.3          4.3
Wholesale and retail trade                 12.530        11.880           12.5         10.8
Other private sector services              18.360        20.450           18.3         18.5
Gas , electricity                             920           660            0.9          0.6
Central administration                     19.430        20.940        •  19.3         19.0
British military bases                      7.780         3.330            7.7          3.0
Pioneer Corps -   Izza u Rabbi , etc ..      (1)          7.880                         7.1
                                          100.460       110.410          100.0        100.0
( 1 ) The first special groups set up to provide work for unemployed were established in 1v72
Source : - Central Office of Statistics , Annual Abstract of Statistics
   v       - Office of the Pirme Minister - Economic Survey ( 1976 )
 ---pagebreak---                                 ANNEX 2 : SECTORIAL BREAKDOWN OF GROSS FIXED CAPITAL FORMATION
                                              y                   In t M OOO at  current prices               Structure  in X
                                               1970       1971      1972         1973        1974    1975     1970         1975
Agriculture and fisheries                       292        270       255          529         480      468     1.1          1.3
  9
Manufacturing industr "                      A. 918      3.907     3.601        4.402      4.517    7. 664    17.7         20.5
Construction and quarrying                   1.182         946       822        1.108       1.701   1.472      4.3          3.9
Transport and communications                 3.617     . 3.369     2.226        2.459       3.062   3.545     13.0          9.5
Houzing                                      4.578       6.335     7.431        5.280      4.096    3.305     16.5          8.8
Hotel trade                                  1.282         861       544          621         923      947     4.6          2.5
Other services                               1.870         976     1.376        2.264       2.623   2.099      6.7          5.6
Total private sector                        17.737     16.664     16.254      16.663      17.401   19.500     63.8         52.0
                      1
Total public sector                         10.076       8.857     6.279        5.590/'   13.795   17.982     36.2         48.0
                                                                                                                       «
Grand total                                27.813      25.521     22.533      22.251      31.196   37.482  ' 100.0        100.0
1   The sectoral breakdown of public investment is not known
Source : Central Office of Statistics , Malta : National accounts of the Maltese Islands 1966-1975
 ---pagebreak---                            ANNEX 3 : BREAKDOWN OF CIF IMPORTS BY PRODUCT AND MAIN COUNTRIES OF ORIGIN
                                                     in H 000 , at current prices
                                                                                                                          Average
                                                                                                    9 months   9 months | annual       Structure in A
                                                              1967
                                                                      |         !
                                                                                     1974    1975    1975       1976      incolase
                                                                                                                          1967-1975 1967
                                                                                                                               %
                                                                                                                                               1975
                                                                                 i
                                                                     Ii         i
  Foodstuffs                                                12.709      18.513      35.720  37.332  25.068     28.265      . 14.4      31.4     25.8
  Cereals                                                     2.878      3.834      10.564  11.487   n . a.     n.a .   1    18.9  j    7.1      8.0
  live animals anil m^at                                      2.44 4     3.408       4.050   4.715     II        ti
                                                                                                                              8.6       6.0      3.3
  fruit and veget.iM ^                                        1.680      2.219       3.176   3.645     II        it
                                                                                                                             10.2       4.2      2.5
  dairy produce , coos                                        1.350      2.409       3.199   3.371     M         ii
                                                                                                                             12.1  j    3.3      2.3
  sugar                                                          736     1.424       4.709   3.228     (I        ii
                                                                                                                             20.3       1.8      2.2
  Raw materials atnl energy                                   4.752      7.422      20.757  17.432  13.074     14.547        17.6      11.7     12.1
  oil and derivatives                                         2.442      4.996      15.558  13.643  10.369     11.442        24.0       6.0      9.4
  veget ab le and an (»id l oils                                331         516      1.542   1.069        744       723      15.8       0.8      0.7
  Semi finished products                                      8.455     19.041      41.172  44.050  31.240     40.922        22.9      20.9     30.5
  texti les                                                   2.958      9.397      20.487  20.755   n.a .      n.a .        27.6       7.3     14.4
  chemi cals                                                  2.683      4.890       9.121   8.474   6.352      8.264        15.5       6.6      5.9
  Other finished products                                   11.436      16.517      30.523  35.745  24.130     36.144        15.3      28.2     24.7
  machines                                                    4.727      7.264      14.857  18.165                           18.3      11.7     12.6
                                                                                                    15,791     26.026
  transport équipant                                          2.241      2.846       5.372   5.943                           13.0       5.5      4.1
  made up garments and footwear                               1.514      2.169       3.362   3.364   n. a.      n.a .        10.5       3.7      2.3
  Other                                                         475        827       1.675   1.425   1.187          905      14.6       1.2      1.0
  total                                                     40.510      67.210     I38.969 144.448 100.992    129.049        17.2     100.0    100.0
  Main countries of origin
  United Kingdom                                            15.803      21.231      34.148  38.386  27.811     32.046        11.7      39.0     26.6
  Germany                                                     1.524      4.090      11.592  13.213   8.007     13.522        31.0       3.8      9.2
i Italy                                                      6.411      12.556      23.940  26.100  18.486     22.564        19.2      15.8     18.1
  Bene lux                                                   8.223       n.a .      13.798  11.802   8.744      9.162         4.6      20.3      8.2
  France                                                      1.288      3.144       6.298   6.606   4.855      6.933        22.7       3.2      4.6
  EEC of nine                                               27.720       n.a .      91.046  97.423  67.749     85.502        17.0      68.4     67.5
  Unrtea States
    .
                                                         ^
                                                          I
                                                              1.293
                                                                      | 3.818        8.143  11.540   n.a .      n.a .        31.5
                                                                                                                                     _±u         8.0
   Sources : Central Office of Statistics / Malta : Annual abstract of Statistics 1975
                    vttnnHpH hv thp M a I tp^p Antfcftri t tipq
 ---pagebreak---                                                                     m
                                   ANNEX 4 : BREAKDOWN OF EXPORTS        BY PRODUCT AND MAIN COUNTRIES OF DESTINATION ( FOB )
                                                                  IN -t M OOO at current prices
                                                                                                                       Average
                                                          1967         1972      1974
                                                                                                  9 months  9 months    annual      Structure in %
                                                                                           1975
                                                                                                   1975      1976      incolase
                                                                                                                                   1967      1975
                                                                                        î
                                                                                                                       1967-1975
                                                                                                                           %
Foodstuffs                                                1.519         1.784    4.453     4.928   3.686     6.311       15.8       21.2      9.8
  potatoes                                                    376         475        365     547               »
                                                                                                                          4.8        5.3      1.1
  flowers , seed                                              303         229        223     226     180       249      - 3.6        4.2      0.5
  tobacco                                                     200           54   1.045     1.930   1.390     1.680       32.8        2.8      3.8
  processed -. jm' c      tural products                      162         532    2.409     1.957                         36.5        2.3      3.9
Raw materials                                                329          435        926     528      561       781       6.1        4.6      1.1
  serag                                                       283          430       781      464    338        452       5.4        4.0      0.9
Semi finished products                                    2.973         5.140    8.224     6.444   4.774     6.117       10.1       41.6     12.8
  textiles ( yarns and fabrics )                          2.390         2.735    4.506     3.585   2.579     1.460        5.2       33.4      7.1
  rubber products                                             542       1.913    3.136     2.180   1.704     1.460       19.0        7.6      4.3
Finished products                                         2.333        14.209   28.950    38.435  27.395    44.088       41.9       32.6     76.3
  made up foods                                           1.474         7.968   19.256    27.688  20.031    29.063       44.3       20.6     66.0
  sanitary equipment                                                    1.439    2 . 245   1.939                                              3.9
 plastic foods                                                120          641   1.419     1.331     977     1.199       35.1        1.7      2.6
 toys                                                          85          281   2.886     3.560     498     1.613       59.5        1.2      7.1
  electronic                                                               435       419     635                                              1.3
Total                                                     7.159        21.568   42.633    50.336  36.123    57.302       27.5    I 100.0 I 100.0
            JîX. -Ç.Q.unt_rx _o_f de
 United Kingdom                                           2 . 739       8.236   13.777    13.400   9.880    11.452       22.0       38.3     26.6
 Germany                                                      131       3.670    4.901    12.294   9.069    16.112       76.4        1.8     24.4
 Bénélux                                                      386       2.525    5.429     6.495   4.222     5.927       39.4        5.4     10.9
 EEC                                                                            31.466    36.954  27.007    39.615                           73.4
 !^ 1a . .             . . ■ ( 2)                             600         815    2.533     3.987   3.133     6.477       26.7        8.4      7.9
 Other Arab countries                                          95         347    1.451     2.264                                     1.3      4.5
                                                                                                                     I           I         I       I
Sources : Central Office of statistics , Malta : Annual Abstract of Statistics 1975
             Data supplied by the Maltese authorities
( 1 ) excluding agrair work
( 2 ) estimates
 ---pagebreak---                       - Sfr-
   ANNEX 5 : GOLD AND FOREIGN CURRENCY RESERVES
                 ( end of period )           . .
                                                 In number of month 's
year                in US 2 million              imports for the year
                                                        in question
1969                    139.2                         v   11.3
1970                    157.9                             11.8
1971                    198.1                             14 . 8
1972                    275.1                             18.8
1973                    325.2                             16.3
1974                    401.9                             13.4
1975                    500.3                             15.9
1976                    622.2                         ' 17.3
Source : IMF / International Financial Statistics . February 1977
 ---pagebreak---                                       ANNEX 6 : BREAKDOWN OF THE VALUE OF AGRICULTURAL PRODUCTION
                                                                               I                           1      Production
                                                           in -t M 000               as % of the total            ( in'000 t )
                                        Averaqe      Average                       Averaqe    iI  Average     Average
                                       1968-1971    1972-1975          1975      1968-1971       1972-1975   1972-1975         1975
Cereals , foader etc ..                    642          976          1.381          21.5           22.2        25 . A          26.2
  wheat                                      73          174          . 327          2.4            4.0         2.1             2.3
  var ley                                    48           95            137          1.6            2.1         1.8             2.0
  fodder                                   392           564            752         13.1           12.8        19.2            19.9
Vegetables                               1.782        2.785          3.911          69.7           63.4        60.4            60.6
  potatoes                                 691          893          1.225          23.1           20.3        20.1            18.3
  onions                                    126         149             171          4.2            3.4         4.3             4.5
  tomatoes                                 298          760          1.162          10.0           17.3        14.3            15.6
  melons                                     62         106             145          2.1            2.4         1.4             1.1
Fruit ( 1 )                                298          353             419         10.0            8.0         4.1             4.3
  citrus fruit                               61           68             81          2.0            1.5         0.6             0.8
  strawberries                                            30             44                         0.7
Flowers nad seed                           263          279             280          8.8            6.4
total ( 1 ) excluding stockfatmmg        2.985        4.393          5.991         100.0          100.0        89.9            91.1
Bovine animals ( '000 head )                                                                                   10.5            11.2
Sheep ( '000 head )                                                                                             7.3             8.0
( 1 ) excluding grape production
Source : Central Office of statistics , Malta : Annual abstract of Statistics 1975
 ---pagebreak---                       ANNEXE 7 : GROWTH OF MANUFACTURING INDUSTRY AND BREAKDOWN OF ITS ADDED VALUE ( % )
                                                        I   Average annual growth on the      I Structure of added value^i^    I
                                                            basis of production indices          the basis of current prices N
                                                            1964-19.69         1969- 19 74           1969            1975
  Foodstuffs                                                   4.7                4.8                 9.6             8.6
  Beverage ana * obacco                                        7.7               11.6                14.9            11.8
  Textiles , made up articles , hides , leather
  and footwear                                                19.1               12.3                24.2            37.9
  Wood and furnishings                                        12.8                1.8                  5.6            6.3
. Printing                                                    16.7                5.4                  6.0            5.5
  Chemicals and plastics     ( 2)                             14.3               12.1                  6.2            3.8
  Non metallic mineral products                               19.4              - 1.6                 4.7             2.9
  Machinery                                                   12.6               16.4                 4.3             7.0
  Transport     vehicles                                       6.4                7.9                16.1             7.4
  Other metal processing                                      16.9               13.5                 4.2             6.1
  Other manufacturing industry                                12.3              - 1.3                 4.2             2.7
  Manufacturing industry as s whole     ( 3)                  10.1                9.0              100.0            100.0
  ( 1 ) at factor cost
  ( 2 ) rubber products are grouped together with chemicals to calculate the production indices and with transport vehicles
        to calculate the added value
  ( 3 ) excluding the shipyards