Malta's economy is doing well - IMF

Times of Malta

22 February 2017

Malta's economy remains strong with an appropriate balance between lowering public debt and sustaining economic growth, the International Monetary Fund has said. 

The IMF's executive board commended local authorities for implementing "sound macroeconomic policies,", saying these had contributed to "strong economic performance, robust job creation, low unemployment, and improved public finances."

They noted that Malta's economy was one of the fastest-growing in Europe and that the country's banking system remained well-capitalised and liquid, "well above the levels seen in European peers". 

The IMF's appraisal came at the end of its latest consultation with Malta, known as an Article IV consultation. As part of an Article IV consultation, a team of IMF economists visits a country to assess its economic and financial developments and meets with key stakeholders from politics, business, unions and civil society. 

In its executive summary, the IMF noted that as a small and open economy, authorities should continue to strengthen competitiveness and bolster Malta's economic resilience to shocks. 

To achieve fiscal targets, the IMF said, Malta had to enhance tax collection efficiency and contain its fast-growing wage bill and spending on goods and services. 

Although Malta's banking system was better off than that of many other EU states, the IMF warned that protracted low interest rates, weak credit growth, legacy corporate non-performing loans, and an uncertain external environment pose challenges.

They also warned that local banks' high exposure to the property market "could lead to imbalances", and encouraged authorities to deploy "targeted macro-prudential tools" to enhance resilience to property market swings. 

The Malta Development Bank, the IMF said, could help support the economy by giving SMEs access to credit, provided that such credit went to "viable firms". 

Continued structural reform momentum had to be maintained, IMF directors noted, saying that Malta had to keep introducing more women into the workforce, do more to foster research and innovation and improve the efficiency of its judiciary.