In its latest report on Malta, ratings agency Moody’s said that whilst future economic and financial stability is mostly assured with the island’s accession to the European Union in 2004, crucial progress still needs to be made in areas such as economic liberalisation if the jurisdiction is to successfully harmonise itself to the European acquis communautaire.
"The challenges faced by the island are mainly of a fiscal nature: public finances have registered sizable deficits in recent years, and government debt has exceeded the 60% ceiling set by the Maastricht criteria," says Moody’s analyst Bernard Musyck, author of the new report. "Malta's budget for 2003 does not provide for significant cost cutting, and public finances are still overburdened by generous social security benefits. Moreover, actuarial studies for the much-needed reform of the pension system have still not been concluded," Musyck added.
Whilst Moody’s noted that the current account deficit of 5% of GDP reflected a tail off in exports from the electronics sector and a decline in tourist numbers owing to recent geopolitical events, the agency said the island is well placed to develop higher value-added technology-based industries in the medium to long-term.
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