17 March 2004

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We’re richer than we thought, and that’s bad news

- Malta fights for its EU millions as GDP soars beyond EU average

By Matthew Vella

The Maltese government has registered its concern at a recent informal Council of Ministers session, held in Portlaoise in Ireland, on the future of Malta’s eligibility to EU funding.
The bone of contention lies in Malta’s gross domestic product, the total value of final goods and services produced in Malta, which is currently at 77.7 per cent of the EU-25’s average GDP. Eligibility for Objective 1 Structural Funds, for which over EUR 135 billion were allocated between 2000 and 2006, demands that GDP levels are lower than 75 per cent of the EU average.
It looks to be a nasty surprise for the Malta government, which earlier on in the run-up to the EU referendum, had brandished a GDP level of 53 per cent of the EU average (2000 figures), the ultimate measure that would have rendered Malta eligible for Objective 1 funding, the main funding instrument for less well-developed regions in the EU. These are usually characterised by low levels of investment, higher than average unemployment, lack of services for businesses and individuals, and poor basic infrastructure.
A statistical revision by Eurostat, the EU’s statistical and research unit, in December 2003 however revealed that Malta’s declared wealth in 2000 had been grossly under-declared by 18 per cent, with the revised figure standing at 70.7 per cent of the EU-15 average. With the entry of the poorer Central and Eastern European countries, Malta’s GDP average is already beyond the 75 per cent threshold.
Spokespersons for the Office of the Prime Minister said the process leading to the EU’s next budget, spanning from 2007 to 2013, in which Malta’s Objective 1 status will be determined are still going on: “This budget will be the subject of long negotiations during meetings, forums and conferences over the next years,” a spokesperson told this newspaper. Sources from the Foreign Ministry also said Malta’s eligibility to these funds will be drawn out over a long series of discussions which have yet to assess the allocation of the structural funds.
Eurostat’s revised figures have contributed to speculation on ‘special’ statistical calculations for Malta’s comparative wealth, to ensure GDP would be calculated at well below the EU average, in a bid to qualify for as many funds as possible during negotiations. According to the Eurostat revision, none of the fluctuations registered between the original and the revised data for the accession countries differentiated by more than six percentage points, unlike Malta’s leap from 53 to 70.7 per cent of the EU-15 average.
John Attard Montalto, Labour MP serving as observer in the European Parliament, during an interview with sister newspaper MaltaToday said he has been in continuous contact with Josef Bonnici, Nationalist MP and European Parliament observer, to discuss the possibility of having economic data inputted in such a manner that Malta would not surpass the threshold: “It is statistically possible within the current regulations to submit data in particular formats so that Malta’s GDP won’t surpass the stipulated minimum level,” Attard Montalto had said.
At the time of going to print, Attard Montalto was unavailable for comment, whilst Bonnici was away from the island.
According to Eurostat, Malta’s current GDP per capita (for the year 2002) stands at 70.7 per cent of the EU average, making the country one of the wealthiest among the 10 accession countries.
Cyprus has the highest GDP per capita, 76 per cent of the EU average while Malta and Slovenia are both second with GDP per capita calculated at 69 per cent of the EU average. Latvia and Lithuania have the lowest GDP per capita at 35 per cent and 39 per cent respectively of the EU average.
Between 2000 and 2006, some fifty regions, home to 22 per cent of the European population were covered by these structural funds. In previous years, income per head in these regions increased from 63 per cent to 70 per cent of the EU-15 average. Despite the progress, some regions such as those in Greece, the British north and the Italian mezzogiorno, made no remarkable advances.

Copyright © Newsworks Ltd. Malta.
Editor: Saviour Balzan
The Malta Financial & Business Times, Newsworks Ltd, Vjal ir-Rihan, San Gwann
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