National reform programme 2008-2010 Malta - European Commission

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This high degree of decentralisation is conducive to relative wage flexibility, as wages adapt more readily to the prevailing conditions in a particular industry. Government will ensure that its wage policy in the public sector contributes to wage moderation in the economy. Furthermore, Government will continue to aim to reduce the share of public sector employment, through further privatisation efforts, as well as the implementation of a strict recruitment policy. This will also help to instil further flexibility in the labour market. Malta’s flexicurity strategy will also contribute towards this objective by seeking to attract more people in the labour market, principally women and older workers, tackle undeclared work and make declared work more attractive, raise educational attainment and ensuring that labour market legislation is consistent with a flexible and dynamic labour market. Fiscal Policy Issues and Opportunities • Whilst the Maltese economy has sustained a positive growth momentum since 2005, the significant downside risk levels surrounding the global macroeconomic outlook pose a degree of uncertainty to the short-term growth prospects. These risks relate primarily to the expected slowdown in world economic growth, including in Malta’s main trading partners, as a result of the recent financial turmoil in credit markets. Other downside risks include the inflationary pressures stemming from international prices of oil, commodities and food products, as well as the appreciation of the Euro against the US dollar and the Pound sterling. Such cyclical developments pose an additional challenge to the implementation of Government’s fiscal consolidation programme. • As in other nations, demographic changes in Malta are expected to represent a significant challenge in the coming years. In particular, the combination of lower birth rate, longer life expectancy and the entry into retirement of the ‘baby-boom’ generation is expected to lead to a significant rise in the outlays on pensions paid by Government over the next twenty years. Demographic developments are also expected to result in increasing pressures on other agerelated public expenditure, namely health care and long-term care outlays. The availability of expensive medicines and technology coupled with the global scarcity of health care human resources provide additional pressures to the financial viability of health care systems. • Fiscal governance is an important element to ensure that budgetary targets are met. Furthermore, the effective and efficient functioning of public administration can play an important role in achieving a growth supportive environment. Over the recent years, significant improvements have been achieved in the provision of public services. Achieving modern, high quality and customer-focused public services remains a key Government priority. Given the scarce resources available, such objective must be achieved whilst ensuring that the available financial resources are spent, and the human resources are deployed, in an efficient and effective manner. • Adopting the euro entailed that Malta can no longer make independent use of monetary and exchange rate policies. Fiscal policy, together with product and labour market structural reforms, can constitute an important instrument of macroeconomic management. In particular, fiscal policy, specifically automatic stabilisers, can enhance the economic adjustment process when faced with certain types of short-run shocks. The smoothing capacity of automatic stabilisers may be limited for small, open economies, such as Malta, due to leakage effects. Moreover, it is necessary to ensure that the use of fiscal policy does not undermine long-term sustainability. In this context, enhancing the flexibility and efficiency of public spending becomes even more important, in order to increase the adjustment capacity of the Maltese economy within the Euro Area. Malta National Reform Programme 2008-2010 - 56 -
• The public sector can contribute towards growth and employment through tax and expenditure systems that promote an efficient allocation of resources. On the expenditure side, this involves redirecting expenditure towards growth enhancing categories. Containment of recurrent expenditure and an increase of its efficiency would make room for increased expenditure on growth-enhancing categories. More efficient tax systems can also provide an important support to growth and employment. Vision and Objectives Securing a sustainable fiscal position is essential in order to ensure a stable and sound macroeconomic framework. This would generate the necessary confidence by economic operators and potential investors. It would also allow Government to use automatic stabilisers in economic downturns so as to stabilise demand without undermining the 3 per cent deficit reference value and the long-term sustainability of public finances. Whilst recognising that the current international environment poses an additional challenge to the achievement of the fiscal targets, Government remains committed to continue to strengthen the public finance situation. The main fiscal policy objective is to reach the medium term objective (MTO), of a balanced budget in structural terms (i.e. cyclically-adjusted balance net of one-off and other temporary measures) by 2010, in line with the Stability Programme 2007-2010 of December 2007. Achieving the MTO is part of Government’s strategy to secure long-term fiscal sustainability in view of demographic changes and their negative implications on public finances in the long term. Government’s Vision 2015 as well as the Pre-Budget Document 2009 highlight that achieving a budget surplus by 2010 constitutes a key objective to which Government is committed. Such a fiscal target should enable the achievement of the MTO. Such improvement in the fiscal position will contribute to further reductions in the debt-to-GDP ratio. Securing a sustainable fiscal position in the long-term also remains a priority in Government’s policy agenda. The stated aim of the pension reform was to enhance the adequacy aspects whilst consolidating fiscal sustainability. Developments in retirement pensions will be reviewed, in line with the legislative commitments resulting from the pensions reform (which provides for a review every five years, with the first review scheduled for 2010), with a view to achieving further adequacy, sustainability and social solidarity. Malta National Reform Programme 2008-2010 - 57 -
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Contents List of Acronyms..........
Page 4 and 5:
Conclusion.........................
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IT Information Technology SCM Stand
Page 8 and 9:
Introduction The renewed Lisbon Str
Page 10 and 11:
Malta’s NRP 2005-2008 Closure Rep
Page 12 and 13:
Measure 1.5 Redeploy Government emp
Page 14 and 15: Measure 1.12 Promote public service
Page 16 and 17: Measure 2.1.3 Develop SME loan guar
Page 18 and 19: Measure 2.4 Enhancement of existing
Page 20 and 21: In July 2008 Malta experienced a 1.
Page 22 and 23: Moreover, Government has set its vi
Page 24 and 25: The first phase of this initiative
Page 26 and 27: Between 2005 and 2006, 37 22 partic
Page 28 and 29: A consultation paper on the introdu
Page 30 and 31: Measure 4.7 Establish a forum betwe
Page 32 and 33: Within this context, an MPA Steerin
Page 34 and 35: The main plant of Sant Antnin is be
Page 36 and 37: Political Summary The re-launch of
Page 38 and 39: Addressing Malta’s Specific Recom
Page 40 and 41: Whereas it may be confidently ascer
Page 42 and 43: Table 2 - Key State Aid Indicators
Page 44 and 45: Older workers Increasing the employ
Page 46 and 47: Implement changes to the tax and be
Page 48 and 49: Containing public health care expen
Page 50 and 51: Within this context the existing Bu
Page 52 and 53: Raising educational attainment and
Page 54 and 55: • a number of policy reviews whic
Page 56 and 57: Macroeconomic Policies Recent Econo
Page 58 and 59: The improvement in the current acco
Page 60 and 61: Vision and Objectives Stable macro
Page 62 and 63: The generally widespread trend in E
Page 66 and 67: Microeconomic Pillar The turbulent
Page 68 and 69: • 5 IOs concerning Financial Serv
Page 70 and 71: The ongoing screening process has i
Page 72 and 73: The results of this investment have
Page 74 and 75: In this respect, energy efficiency
Page 76 and 77: Employment Increasing the overall e
Page 78 and 79: The opposite is true for those with
Page 80 and 81: The project will help young people
Page 82 and 83: This process aims to facilitate the
Page 84 and 85: In addition, MCAST is embarking on
Page 86 and 87: Apart from the Faculty of ICT, the
Page 88 and 89: • the Implementation of an on-goi
Page 90 and 91: Appendix: 01 - List of Measures
Page 92 and 93: 3.4 Manufacturing research projects
Page 94 and 95: 9.0 Addressing Groups at Risk 9.1 E
Page 96 and 97: 15.5 Upgrading of Zewwieqa Waterfro
Page 98 and 99: Appendix: 02 - Flexicurity Measures
Page 100 and 101: key competencies to adult learners
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National reform programme 2008-2010 Malta - European Commission

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