By Matthew Vella
Latest statistics from the European Union’s statistical office, Eurostat, have indicated that Malta has reached 75 per cent of the EU’s average rate of gross domestic product, but a government spokesperson told The Malta Financial and Business Times yesterday that Malta is lobbying hard so as to reap as much as possible from the funding currently available, which it believes are essential to its development.
EU Member States are in a position to be recipients of full objective 1 status funds only if their GDP is lower than 75 per cent of the EU average.
Finance Ministry Parliamentary Secretary Tonio Fenech emphasised at last week’s ECOFIN meeting the importance of not penalising new Member States by removing the possibility of benefiting from full convergence objective 1 status merely because of the “statistical effect”, as the GDP average of the EU25 would be much lower than that of the former average of the EU15.
Eurostat’s preliminary estimates reveal that GDP per capita in Malta during 2003 reached 75 per cent of EU average. In 2002 Malta's GDP per capita was just below the threshold at 74 per cent. The GDP per capita quoted by Eurostat is expressed in terms of purchasing power standards, an artificial currency that reflects differences in national price levels that are not taken into account by exchange rates.
In Luxembourg the GDP per capita in 2003 was more than twice the average of the EU of 25 member states. Ireland's was one third above average. Among the 10 new acceding states, Malta's GDP was the third highest compared to Cyprus's 83 per cent and Slovenia's 77 per cent.
A spokesperson for Tonio Fenech told The Malta Financial and Business Times that the government was “lobbying hard” and was seeing “positive signals” on the question of funds.;
“The statistical effect is borne out of the fact that the formula used to distribute certain funds is also tweaked in favour of sparsely-populated areas which require more funding, such as rural areas.”
The spokesperson said that Malta’s dense population, one of the highest in the world, had betrayed the realities of the island’s developmental needs.
“We are saying that the island has a high density of population and consideration should be given for our special needs. We are lobbying very hard on this matter, and we are also seeing positive signals.”
The funds concerned are the cohesion funds, the European Social Fund, and the European Regional and Development Funds. Malta expressed its concern at ECOFIN on the manner in which Cohesion funding allocations do not take sufficient account of the specifics of the regions including higher population density, as is the case in Malta.
“The EU Member States are aware of our limitations. Not every country manages to absorb certain funds, and we are lobbying that the money left over gets pumped back over to us.”
The spokesperson also said that Malta is actually performing at a favourable absorption rate in the area of EU-funded projects, looking to make even greater use of the funds available to Malta.
“Basically government is doing as many projects as it can, and in terms of capacity, of the amount of projects we can handle, given our limitations, we are faring very well. That is basically our absorption rate of these funds, how much we can actually manage to spend in a certain timeframe. We can only do so many projects and these have to be in line with EU regulations. But we are also lobbying for an increase in funds, and one way of increasing our absorption rate is by increasing the spread and type of projects.”
During last week’s ECOFIN meeting, the last under the Dutch Presidency, the Council covered EU economic and financial policy in a number of areas including the European Commission’s expenditure budget, which focused on the state of play following the Dutch Presidency’s Building Block Proposals. During the debate, Mr Fenech highlighted Malta’s concern that discussions to date have at times tended to generalise the main positions of each member state without entering into the specific concerns of each member state.
The Commission and the European Central Bank presented the 2004 report on the convergence of the member states economic performances. For the first time these included an assessment of the progress achieved by the 10 new member states, including Malta, towards the adoption of the Euro. The Council expressed its satisfaction on the progress attained by all the new member states in line with the convergence programmes that had been agreed.