The IMF statement began by announcing that the Maltese authorities must be commended for the successful adoption of the euro on 1st January, 2008, calling it "a crucial landmark in their growth-oriented reform agenda".

This agenda appropriately aims at leveraging Malta's strengths and income-generating potential through closer integration in the European and global economies, the IMF suggested.

The Fund then went on to discuss Malta's three-year-long expansion, underpinned by foreign direct investment (FDI) and export diversification.

They found that in the context of buoyant EU activity, growth accelerated to 3.8% in 2007, while the external current account deficit declined to 5.5% of GDP.

Expenditure-based budget retrenchment continued in 2007, but the public finances remain fragile, the IMF officials continued.

Tight current spending control allowed tax cuts and achieved the first recorded current surplus in recent years, they added.

Looking to the future, the IMF announced that it supports the Maltese authorities' intention to consider additional measures to meet 2008 budget targets, and argued that reinforcing the fiscal framework would help preserve the benefits of fiscal consolidation and reorient spending toward priority areas.

Another plus point that the IMF highlighted was that Malta's banking system is well-placed to weather the current global turmoil.

Banks have healthy liquidity positions and a good funding profile rooted in domestic retail deposits, according to the report.

Additionally, they appear to have no direct exposure to US subprime mortgage-based assets.

As a member of the EU, Malta is actively strengthening its national and cross-border crisis management framework in the light of lessons from the recent international financial turmoil, the IMF found.

The IMF statement concluded by revealing that improving product market competition and labor market flexibility is essential to realize Malta's growth potential.

The authorities have made remarkable gains in strengthening the business environment and improving education outcomes. Ensuring the necessary flow of qualified human capital will require further improvements in educational attainment as well as removing barriers to labor market participation, the report stated.