National reform programme 2008-2010 Malta - European Commission

Concerning horizontal aid one notes that over 70% of all aid granted in Malta goes to the
manufacturing sector, primarily under existing aid schemes agreed with the EU during
accession negotiations . As a result, the share of aid for horizontal objectives is comparatively
low at 7.2% of total aid granted in 2006. This compares favourable with the level of 3.1%
share registered in 2005. Moreover, the trend in the share of aid to horizontal objectives as a
percentage of total aid is positive, and amount to 0.9 percentage points for the 2001-2006
period.
The specific realities faced by different Member States and regions should be appropriately
taken into account. In this regard, small Island States like Malta face ad hoc geographical
realities and disadvantages that cannot be sufficiently addressed only by horizontal measures.
Given the nature of some of the State aid currently being granted in Malta it is not realistic at
this stage to establish annual projections of State aid to be granted in a particular year. As
pre-2004 schemes reach their end duration date as established in the Accession Treaty, it
would be possible for Malta to determine annual State aid projections with an appropriate
degree of certainty. . Moreover, as the restructuring aid package for Malta Shipyards ends in
December 2008, the level of State aid granted in Malta to the sensitive sectors will decline
significantly in future years.
It is envisaged that State aid policy in Malta will in general continue to move towards less and
better targeted aid. Particular attention will also be given to the promotion of horizontal State
aid measures, which reflects the message given to Member States in the Stockholm
European Council in 2001 to "demonstrate a downward trend in State aid in relation to GDP
by 2003" and also to "redirect aid toward horizontal objectives".
Given Malta’s status as an Article 87(3)(a) region, it is envisaged that development aid
measures will continue to be implemented in the NRP period. The nature of such intervention
would bolster the rhythm of socio-economic development in Malta, contribute towards the
realisation of Malta’s Vision 2015, and also support the further integration of Malta into the
European economy.
Moreover, Government will continue to remain vigilant for market imperfection situations that
may arise in specific areas, especially in the wake of the specificities of the economy, as
State aid may be an important policy instrument to mitigate such situations. In this way
appropriate measures may be necessary to support the competitiveness of the economy,
whilst honouring State aid principles.
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