25 October 2006


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Business Today



EU25 deficit at 2.3% GDP

Malta was among nine EU member states with government debt ratios higher than 60% of GDP in 2005, with a deficit of over 3%.
The European Union’s statistics agency Eurostat revealed drops in government deficits for both the euro area and the EU25 in 2005 compared to 2004, but an increase in debt. In the euro area the government deficit increased from 2.8% of GDP in 20004 to 2.4% in 2005, and in the EU25 it fell from 2.7% to 2.3%.
In the euro area the government debt to GDP ratio rose from 69.8% in 2004 to 70.8% in 2005, and in the EU25 from 62.4% to 63.2%.
In 2005, the largest deficits in percentage of GDP were recorded by Hungary (-6.5%), Portugal (-6%), Greece (-5.2%) and Italy (-4.1%). Malta was among those states with marginally higher deficits than 3%, along with the Czech Republic, the UK, Germany and Slovakia.
Denmark registered a surplus of 4.9%, followed by Sweden, Finland, Estonia, Spain, Ireland and Latvia all recording positive balances. In all 15 governments recorded an improved government balance relative to GDP in 2005 compared to 2004, while nine government registered a worsening.
Denmark, Hungary, Poland and Sweden are at present benefiting from a transitional period of implementation of Eurostat’s decision on classification of funded pension schemes, which has the effect of temporarily improving their balances. From 2007, the derogation will come to an end and the defined contribution funded pensions scheme in these four countries will have to be classified outside the government sector.
In 2005, the lowest ratios of government debt to GDP were recorded in Estonia (4.5%), Luxembourg (6%), Latvia (12.1%) and Lithuania (18.7%).
Malta was among the highest with 74.2% in 2005 – but states like Greece and Italy are over the 100% mark, and Cyprus, Germany, France, Portugal and Austria are still over the 60% mark.



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