An International Monetary Fund (IMF) delegation was recently in Malta on an eleven-day visit to discuss the current state of the Maltese economy and the challenges facing it, Business Today is informed.
During the visit, the IMF mission met with Finance Minister Tonio Fenech, the Governor of the Central Bank of Malta, Michael C Bonello and “other senior officials, as well as representatives of the private sector and the Opposition party, social partners, and academics,” an IMF spokesperson told Business Today.
The IMF all-female delegation also included two economists – Luisine Lusinyan, and Valerie Herzberg.
Among topics covered by the mission throughout the visit, “recent economic developments and economic policy challenges facing the country”, were discussed.
The final assessment of the visit will be shared with the Executive Board of the IMF in the next few weeks and will then be published. Last year, the IMF annual report on Malta was published in August.
Sources close to the mission told Business Today that “the most worrying issues for the IMF were the sustainability of the deficit and public debt within the Maastricht criteria, the issue of over runs, and failure to uphold budegetary targets”.
During the meetings, the IMF delegation even suggested that Malta “ought to have an independent mechanism which would monitor the Government financial targets during the financial year.
“This would comply Government to make more realistic targets and proper evaluations in its budget estimates,” the sources told Business Today.
During their meetings, the IMF delegation pointed out that the government’s “budget financial target for 2008 was exceeded fourfold”.
On the contraction of the Maltese economy, the IMF delegation “accepted that the economy would contract in line with what is happening internationally.
“However, they remarked that Cyprus, which compares to Malta, experienced a slight growth, not a contraction in the first quarter of 2009,” sources said.
The IMF delegation to Malta also raised the controversy that erupted earlier in the year about the suitability of annual forecast models to effectively foresee economic growth on a quarterly basis.
Moreover, inflation was another “point of intense discussion” for the IMF mission to Malta, “not only is it out of sync with the rest of Euro zone, but since it is high, it impinges badly on competitiveness and purchasing power with obvious consequences”.
In this respect, the IMF delegation remarked “that the causes of inflation have to be assessed and immediate action taken to correct the inflationary trend”.
During the meetings, the IMF mission also discussed other matters related to the healthcare system, pensions, education and growth.