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14.12.2012 Official
Journal
of
the
European
Union L
342/43
DECISIONS
COUNCIL DECISION
of 4 December 2012
abrogating Decision 2009/587/EC on the existence of an excessive deficit in Malta
(2012/778/EU)
THE COUNCIL OF THE EUROPEAN UNION,
Functioning of the European Union (TFEU) to Malta,
extending the deadline for the correction of the
excessive deficit by one year, i.e. to 2011. The recom
mendation was made public.
Having regard to the Treaty on the Functioning of the European

Union, and in particular Article 126(12) thereof,
(4) Pursuant
to
Article
126(12)
TFEU,
a
Council
Decision
on
the existence of an excessive deficit is to be abrogated
Having regard to the recommendation from the European
when the excessive deficit in the Member State concerned
Commission,
has, in the view of the Council, been corrected.
Whereas:
(5)
Pursuant to Article 4 of the Protocol on the excessive
deficit procedure annexed to the TFEU, the Commission
provides the data for the implementation of the
procedure. As part of the application of that Protocol,
(1) On
7
July
2009,
by
Decision
2009/587/EC
( 1 ), following
Member States are to notify data on government deficits
a recommendation from the Commission in accordance
and debt and other associated variables twice a year,
with Article 104(6) of the Treaty establishing the
namely before 1 April and before 1 October, in
European Community (TEC), the Council decided that
accordance with Article 3 of Council Regulation (EC)
an excessive deficit existed in Malta. The Council noted
No 479/2009 of 25 May 2009 on the application of
that the general government deficit in Malta had reached
the Protocol on the excessive deficit procedure annexed
4,7 % of GDP in 2008, thus largely exceeding the 3 % of
to the Treaty establishing the European Community ( 4 ).
GDP reference value, while general government gross
debt had been above the 60 % of GDP reference value
since 2003 and stood at 64,1 % of GDP in 2008 ( 2 ).
(6) When
considering
whether
a
decision
on
the
existence
of
an excessive deficit should be abrogated, the Council
should take a decision on the basis of notified data.
(2) Also
on
7
July
2009,
on
the
basis
of
a
recommendation
Moreover, a decision on the existence of an excessive
by the Commission, the Council addressed a recommen
deficit should be abrogated only if the Commission
dation to Malta in accordance with Article 104(7) TEC
forecasts indicate that the deficit will not exceed the
and Article 3(4) of Council Regulation (EC) No 1467/97
3 % of GDP threshold over the forecast horizon.
of 7 July 1997 on speeding up and clarifying the imple
mentation of the excessive deficit procedure ( 3 ), with a
view to bringing an end to this situation by 2010 at the
(7) Based
on
data
provided
by
the
Commission
(Eurostat)
in
latest. The recommendation was made public.
accordance with Article 14 of Regulation (EC) No
479/2009 following the notification by Malta before
1 April 2012 and on the Commission services’ 2012
autumn forecast, the following conclusions are
(3) On
16
February
2010,
on
the
basis
of
a
Commission
warranted:
recommendation, the Council concluded that effective
action had been taken in compliance with its recommen
dation under Article 104(7) TEC but that unexpected
— After the peak in 2008, the general government
adverse economic events with major unfavourable
deficit has narrowed gradually, reaching 2,7 % of
consequences for government finances had occurred in
GDP in 2011, below the 3 % of GDP reference
Malta after the adoption of its recommendation. The
value. The significant improvement compared to
Council therefore adopted a revised recommendation in
2010, when the general government deficit was
accordance with Article 126(7) of the Treaty on the
3,6 % of GDP, was mainly due to an increase in
revenues by 0,7 % of GDP. The impact of net
( 1 ) OJ L 202, 4.8.2009, p. 42.
deficit-reducing one-off measures in 2011 is
( 2 ) The general government deficit and debt for 2008 were
estimated in the Commission services’ 2012 autumn
subsequently revised to currently 4,6 % of GDP and 62,0 % of
GDP respectively.
( 3 ) OJ L 209, 2.8.1997, p. 6.
( 4 ) OJ L 145, 10.6.2009, p. 1.

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L 342/44
EN
Official Journal of the European Union
14.12.2012
forecast at 0,7 % of GDP. The structural balance, i.e.
benchmark reference medium-term rate of potential
the cyclically-adjusted budgetary balance net of one-
GDP growth, as defined in Article 5 of Regulation
off and temporary measures, is estimated to have
(EC) No 1466/97. However, on a no-policy-change
improved by 1 percentage point of GDP in 2011,
basis, the real net growth in expenditure would
above the requested effort of at least % of GDP
significantly breach this benchmark reference rate in
recommended by the Council.
2013 and 2014.
— The Commission services’ 2012 autumn forecast
— General government gross debt as a share of GDP has
projects the deficit to fall further to 2,6 % of GDP
been on an increasing trend since 2008 and reached
in 2012, mainly thanks to revenue-increasing
70,9 % of GDP in 2011. The Commission services’
measures, most of which are considered to be of a
2012 autumn forecast projects the debt ratio to
one-off nature; the net deficit-reducing impact of
continue increasing to reach 72,4 % of GDP in
one-offs is estimated at 1 % of GDP. On a no-
2012, 73,1 % of GDP in 2013 and 72,8 % of GDP
policy change basis, i.e. without incorporating the
in 2014. By contrast, the 2012 Stability Programme
consolidation measures contained in the 2013
projects the debt ratio to start decreasing after 2011,
budget, which was adopted after the cut-off date of
to 67,4 % of GDP by 2014. The difference between
the forecast, the general government deficit is
the two projections is due to a lower primary surplus
projected to widen to 2,9 % of GDP in 2013,
and higher stock-flow adjustment in the autumn
before narrowing again, to 2,6 % of GDP, in 2014,
forecast.
thus remaining below the 3 % of GDP reference value
over the forecast horizon. The April 2012 Stability
(8) The
Council
recalls
that,
starting
in
2012,
which
is
the
Programme targets lower deficits, of 2,2 %, 1,7 % and
year following the correction of the excessive deficit, and
1,1 % of GDP in 2012, 2013 and 2014, respectively.
for a period of three years, Malta should make sufficient
The difference between the Commission services’
progress towards compliance with the requirement under
2012 autumn forecast and the Stability Programme
the debt criterion, in accordance with Article 2(1a) of
target for 2012 is mainly explained by more dynamic
Regulation (EC) No 1467/97.
revenue growth in the latter.
(9)
In the view of the Council, the excessive deficit in Malta
— In the years after the 2011 deadline set by the
has been corrected by the 2011 deadline and Decision
Council, the budgetary projections of the
2009/587/EC should therefore be abrogated,
Commission services’ 2012 autumn forecast point
to no improvement of the cyclically-adjusted budget
balance, net of one-off and other temporary
HAS ADOPTED THIS DECISION:
measures, in 2012 and to an improvement of
percentage point of GDP in 2013. This is below
Article 1
the 0,5 % of GDP benchmark for the adjustment
From an overall assessment it follows that the excessive deficit
towards the medium-term budgetary objective
situation in Malta has been corrected.
required under the preventive arm of the Stability
and Growth Pact, in particular Council Regulation
(EC) No 1466/97 of 7 July 1997 on the
Article 2
strengthening of the surveillance of budgetary
Decision 2009/587/EC is hereby abrogated.
positions and the surveillance and coordination of
economic policies
( 1 ). This slow adjustment is
projected against broadly balanced cyclical conditions,
Article 3
i.e. the output gap is estimated to be close to zero. At
This Decision is addressed to Malta.
the same time, the composition of growth is expected
to be relatively tax-revenue-poor. Especially in 2012,
economic growth is driven by net exports, while
domestic demand is projected to be rather weak
Done at Brussels, 4 December 2012.
compared to the past trends. In 2014, the
improvement is projected to amount to percentage
For the Council
point of GDP. Furthermore, in 2012, the real growth
rate of government expenditure, net of discretionary
The President
revenue measures, is projected to be below the
V. SHIARLY
( 1 ) OJ L 209, 2.8.1997, p. 1.

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