Country Specific Report - EU stresses importance of fiscal sustainability due to Malta's ageing population

Helena Grech - 9th June 2019

Road congestion is one of the weakest aspects of Malta's business environment and remains a major challenge, the European Commission report noted.

The European Commission's annual country specific recommendations were published earlier this week, with a total of three recommendations made: ensuring the sustainability of healthcare and pension systems, addressing features of the taxation system to avoid aggressive tax planning and focusing investment-related economic policy on research and development, traffic management and innovation.

In addition to addressing features of the taxation system, within the same recommendation the Commission also called on the Government to maintain efforts on the progress made to strengthen anti-money laundering directives and establish a separate prosecution service.

On the issue of public spending in relation to Malta's ageing population, in particular pension and healthcare expenditure, the report noted that these are expected to rise significantly when compared with other EU Member States. The report went on to note that this is an indicator of potential rising debt over the long-term.

It made reference to Malta's plans to leave the retirement age, at 65-years-old, unchanged after 2027. It remarked this was the case despite predictions of a continued growth in life expectancy. The report made note of shortcomings in addressing unnecessary referrals to specialists in the public hospital, as well as issues in properly addressing the inappropriate use of emergency services to outpatients. It did however point towards plans to expand the capacity of public hospital outpatient care, saying this could help the lengthy queues and waiting times for specific areas.

On the issue of traffic and the cost of this to the nation, the report said "Road congestion is one of the weakest aspects of Malta’s business environment and remains a major challenge". It went on to say that energy consumption on the island continues to rise, calling for investments across the board in order to meet the EU 20-20 emissions targets. It also noted that the housing boom and its associated environmental and social costs require closer monitoring.

The report, among other areas, also made note of the need for a strengthening in governance frameworks and government institutions while praising the current administration for adding resources to the Financial Intelligence Analysis Unit.

In comments made on Friday, Prime Minister Joseph Muscat made reference to the EU's recommendation on aggressive tax planning, saying that this is an area of national competence and that Malta's position remains unchanged. He went on to say that the amount of recommendations made to Malta continues to decrease each year. He was responding to sections of the press while attending a conference.

The Malta Chamber noted the 2019 Country Specific Recommendations for Malta, as it observed how these echoed the Chamber’s opinions in several areas. You may read The Malta Chamber's observations here.

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Country Specific Report - EU stresses importance of fiscal sustainability due to Malta's ageing population