The theme chosen for this Pre-Budget Document is ‘Stabbiltà biex noħolqu l-ġid għal kulħadd’.

This theme embodies this Government’s economic stance for this legislature, and its commitment to ensure that the wealth and prosperity achieved keeps being felt and enjoyed by as many Maltese and Gozitan workers, families, and enterprises as possible.

This vision is laid out and explained in the recently-published Pre-Budget Document, which represents the Government’s launching board for the coming consultation period, which will begin in September, in the run up to the Budget 2014 itself.

However implementing this vision is only possible through consultation – consultation with social partners, civil society, stakeholders, investors, employers, and most importantly, the public.

This is why, as part of the Pre-Budget 2014 Consultation process, the Government invites the public in general and stake holders to submit their feedback, thoughts, observations, and suggestions for the coming budget.

A copy of the pre-budget document can be obtained from:



2 Islands With Different Economic Climates

Published: May 13, 2013

BRUSSELS — Cyprus and Malta have a lot in common: Mediterranean islands enjoying 10 months of sunshine a year, they joined the European Union in 2004, use the euro and have banking sectors that dwarf their economies.

There are so many similarities that some investors have wondered whether Malta might follow Cyprus in needing a bailout to survive the region’s economic crisis. But Malta’s risk profile is far different from that of Cyprus, which received an aid package of €10 billion, or $13 billion, last month that was aimed at preventing its collapse and a possible departure from the euro zone.

On the basis of banking risk and its economy, it seems unlikely that Malta will be the next euro member — after Cyprus, Greece, Ireland, Portugal and Spain — to need rescuing.

“The business model of the financial sector in Malta is not as shady and controversial as it was in Cyprus,” said Carsten Brzeski, an economist with ING in Brussels. “The picture is also different at the macro level.”

He added that “Malta should be off the screens for quite some time.”

The European Commission expects growth on Malta, an island economy of 450,000 people, to pick up this year and next, driven by rising domestic demand and increased net exports. The unemployment rate, at 6.4 percent, is around half that of the euro zone; debt as a proportion of gross domestic product is 72 percent, below the euro zone average; and the deficit is in check. All of Cyprus’s precrisis numbers were far less rosy.

Nevertheless, Malta’s banking sector is eight times the size of its G.D.P., about the same as it was in Cyprus before the rescue. This leaves the economy exposed to financial shocks. But in Cyprus, the banking sector was dominated by two domestic banks, both of which relied heavily on foreign deposits, many from Russia, and invested those deposits ingovernment bonds abroad, particularly in Greece.

In Malta, the bulk of banking-sector assets belong to subsidiaries of foreign banks that would be responsible for bailing out the local units in case of trouble. The assets of domestic Maltese banks, which would not be allowed to fail because the economy would collapse, add up to the equivalent of about 200 percent of G.D.P. That is a large, but not terrifying, amount, and the ratio in Cyprus’s case was twice as high.

Maltese domestic banks are highly capitalized, profitable and liquid. What is more, they fund themselves largely from the domestic retail deposit market, lend locally and hold securities issued in Malta, rather than taking on board risky assets like Greek government bonds.

“I want to be very clear: There is no banking sector in the European Union that is comparable to the Cypriot one. Malta, Ireland, Luxembourg, they are not comparable to Cyprus,” Jörg Asmussen, a member of the European Central Bank’s executive board, told a European Parliament committee last week. “One has to look deeper at the structure of the assets and liabilities of the banking sector.”

In a report last month, the ratings agency Fitch said Malta would be far more capable of handling a crisis than Cyprus was. “The contingent liability that potential bank support places on the Maltese sovereign — around 128 percent of G.D.P. — is significantly lower than in Cyprus,” Fitch said.

The International Monetary Fund said in a report last year: “The sensitivity of the Maltese banking sector to sovereign risk events in Europe is low, given very low direct exposures to vulnerable countries, as well as domestic banks’ reliance on a traditional retail deposit-based banking model.”

Some analysts say Malta is vulnerable to a sudden dip in confidence that could prompt investors to withdraw deposits, something that the hit on Cypriot bank customers could easily have prompted.

The key risk “is that its international offshore investors begin to relocate in light of the policy uncertainty created by the Cypriot bail-in,” said Myles Bradshaw, a portfolio manager at Pacific Investment Management. “This would have significant negative economic effects that could in turn create a problem with domestic banks’ asset quality. Together with the deep recession, this could force Malta to seek external assistance.”

In a recent assessment, the European Commission also expressed some macroeconomic concerns, noting Malta’s relatively high level of private debt, particularly home mortgages. But it said that despite some overvaluation and possible oversupply, there was no immediate risk of a property market crash.

Martin Santa is a Reuters correspondent.

A version of this article appeared in print on May 14, 2013, in The International Herald Tribune.


Malta places 3rd in best cities to live in


Malta has placed an amazing third in a list of the best 25 cities for young people to live in.

It is surpassed only by New York (second) and Vienna (first).

The entire list can be found on www.list25.com

It introduces the list by saying: “Young people can be dynamic, free-spirited, idealistic and carefree as well as goal-oriented, driven and practical. Some prefer to leave their hometowns to study in other cities or even other countries and perhaps move around again after obtaining a college degree. It normally depends on their financial capability or just their need to be independent and less restricted. Nevertheless, there are cities like these 25 best cities for young people to live in that are more accommodating to a young lifestyle.”

As regards Malta, the list says: “Yes, we know it’s not a city but rather an archipelago in the Mediterranean. Than why is it on this list of best cities? Nicknamed the “Land of Honey”, Malta might as well be just one city given that its one of the smallest states in the world. Here’s a cool fact though: According to various studies they have the most generous inhabitants in the world.”

The list

Vienna, Austria

New York


Melbourne, Australia

Salvador, Brazil

Dubai, UAE

Vancouver, Canada

Prague, Czech Republic

Edinburgh, Scotland

Paris, France

Auckland, New Zealand

Geneva, Switzerland

Cape Town, South Africa

Frankfurt, Germany

Rome, Italy

Berlin, Germany

Seattle, Washington, USA

London, England

Oslo, Norway

Barcelona, Spain

Amsterdam, Holland

Perth, Australia

Buenos Aires, Argentina

Zurich, Switzerland

Helsinki, Finland