Current Affairs
IMF certificate for Malta – with several recommendations

The Maltese economy has been under the microscope of economists from the International Monetary fund who carry out periodic evaluations on the economy.

In a statement with its conclusions, the IMF mission observed that Malta’s economic growth continues to be one of the strongest in Europe, resulting in rapid income convergence towards the European Union (EU) average. Prudent policies and reform efforts have contributed to the strengthening of private and public-sector balance sheets, while steady job creation has driven unemployment to historically low levels. Growth prospects remain favourable, yet mounting pressure on infrastructure, rapidly rising housing costs, as well as shortages of labour and skills increasingly pose challenges. Improving infrastructure, reducing fiscal risks and enhancing labour supply are key policy priorities to sustain high growth and promote inclusiveness. Attention should also be given to safeguarding financial stability and integrity, including against the risks attached to new activities involving virtual financial assets.

This was another certificate for the Maltese economy by experts from the IMF who visited Malta last month to examine the economic indices and speak with various entities about the state of the Maltese economy.  The conclusions of the IMF experts still have to be analysed by the Executive Board of the IMF which will issue the periodic report about Malta.

The experts, however, also made a series of recommendations on four sectors.

For the financial sector, they urged the Maltese authorities to continue the reform on the implementation of the money laundering directive to safeguard its integrity. They also said that the authorities should ensure and strengthen the independence of regulatory authorities in this field. Regarding the property market, the economists said that the authorities should see that financial incentives do not contribute to further increases in property prices and that these should be mostly targetted at low-income families. They also urged for more social housing.

On the Government’s Budget, the economists said that it should continue to aim for a balanced budget without including the income from the Citizenship by Investment Programme. They also said that the Government should continue to allocate a substantial part of its expenditure to improve the infrastructure which if not improved will lead to a stagnation in the economy. They also urged the Government to look long term at the problem of pensions because of an ageing population. The restructuring of Government enterprises should continue and efforts should be increased to collect the revenue which it is owed.

The conclusions of the IMF mission also urged for greater efforts to increase the number of women and older people in the workplace, adding that while unemployment is at its lowest level ever, there has been no exaggerated pressure for salaries to be increased. They also urged for greater efforts to improve the skills of workers and for the country to invest in research and innovation to continue improving productivity. The IMF experts said that while Malta’s economic prospects are good, they may be hampered by the limitations of the small size of the country.

 

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