This procedure of the BDP was opened in 2013 by the Council under recommendation by the European Commission.
The excessive deficit procedure is governed by Article 126 of the Treaty on the Functioning of the European Union, under which the Member States are obliged to avoid excessive deficits in national budgets. It means that accumulated deficits public of administrations should not exceed the threshold of 3% of gross domestic product (GDP).
What is needed for an Excessive Deficit Procedure to be abrogated?
A decision on the abrogation of an Excessive Deficit Procedure (EDP) is based on a “durable correction” of the excessive deficit. This is deemed achieved if:
- The notified data for the previous year (2013 in these cases) show a deficit below 3% of GDP ( Malta 2,7% in 2013 and 2,5% in 2014)
- The Commission services’ forecast indicates that the deficit will not exceed the 3% of GDP reference value over the forecast horizon (currently 2015 and 2016).
After this news, the Malta Employers’ Association stated “that this was a cardinal point on which it based its Memorandum to Political Parties before the last elections. This memorandum placed fiscal consolidation, through a reduction of the deficit and the public debt, as a key priority.” The association adds that “this must be a sustained effort, through building a competitive economy and proper management of the country’s finances and that government must ensure the long-term sustainability of public finances, and take measures to control unnecessary expenditure such as the rapid increase in public sector employment which, in many cases, is causing a drain on human resources from the private sector”
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