Title: Malta Country Update: Fourth Quarter 2002
1Malta Country Update Fourth Quarter 2002
ATRIUM
advisors
2 Malta is undergoing the structural reforms
necessary to ensure its competitiveness as a
member of the European Union
3Contents
- Part I Intro Recent Economic Developments
- Part II Fiscal Update Budget, Privatization
- Part III Structural Reforms EU Accession
- Malta in the Medium Term
4 Part I Introduction Recent Economic
Developments
5Malta A Competitive Hub in the Mediterranean
- Area 316 km (sq)
- Population 395,000
- GDP Per Capita 9,200
- Inflation 3.1
- Unemployment 5.1
- Foreign Reserves 2 bn
- EU Applicant Country
6A Diversified EconomyClosely integrated with
that of Europe
7Highlights GDP Forecast 3 for Year
- GDP 2.2 year-on-year in Q2 forecast for year
3 - Domestic demand 3.6 year-on-year in Q2
- Exports electronics decline moderating, others
hold ground, transshipment activity growing - Construction in infrastructure Hospital, ferry
terminals, port facilities, roads etc
8Global Downturn Moderate in Malta
9Inflation Falling Back in LineTemporary food
price hikes in 2001 abating
12-month moving average
Year-on-year
10Tourism Holds Its GroundSeptember 11 impact
modest compared with peers
- Arrivals steady overall, but cruise ship tourists
gain ground - Major tour operators Condor, FTI return
- Hotel Groups Intercontinental, Sol Melia invest
in Malta - Air Malta restructures upgrades entire fleet
11Part IIFiscal Update
- Fiscal Accounts, Debt Management, Privatization
12Fiscal Accounts
- 2002 Target on track -4.6 central government
deficit/GDP - Revenues as expected minimum tax level, increase
in compliance, declaration of foreign assets - Expenditures in line rising at a slower pace
(associated w/past wage restructuring agreement).
New talks underway. - Privatization Proceeds MIA privatised other
deals close - No issuance of new long term domestic bonds this
year, however 2 maturing issues were rolled over. - Council of Europe Development Bank to lend Malta
50 of costs of new hospital. 15 year maturity,
costs inclusive.
13Maltas government is determined to bring down
fiscal spending
14Fiscal Deficit Shrinking
15Other Budget Items
- Privatisation Malta International Airport deal
closed in 2002. Plans for MIA stock floatation
later this year. Also pending Lotto, Maltaco
oil terminal. - Public Sector Employment Early retirement
program for drydocks reduces workforce by 700 in
2003 scheme to employ government workers under
public private partnership scheme more incentive
based compensation. - Pensions Committee moving ahead but no major
new plans likely before elections.
16PART III
- Structural Reforms
- European Union Accession
17Tackling Structural Reforms Legislative Drive
Underway in Finance
- Central Bank of Malta Act
- Malta Financial Services Authority Act
- Financial Markets Act
- Business Promotion Act
- Public Finance Management Act
- Special Funds (Regulation) Act
- Industrial Relations Act
18Other Public Sector Initiatives
- E-Government Initiative Malta has put many
government services online -- www.gov.mt - Education Reforms National Minimum Curriculum,
Expand availability of computers to all primary
school classrooms by 2003 - Malta Enterprise Board Consolidates 3 industry
entities into one Metco, MDC, IPSE, enhancing
efficiency and reducing costs.
19Europe Union Accession Update
- All chapters will be closed by end 2002.
- October 2002 Malta declared a candidate country
- Malta negotiated important concessions on real
estate acquisition, free movement of persons,
protection zone for fisheries,special status for
Gozo
20Part IVMalta in the Medium Term
- Niche Manufacturer, Regional Hub, Added Value
Tourist Resort
21Moving Up the Value Added ChainMalta now
successfully competes with Asia and Ireland as a
niche manufacturer
- Baxter (medical supplies) has chosen Malta for a
new plant over Singapore employees up by 25. - De La Rue (security printers) is moving key
operations from Singapore to Malta. - Menrad (spectacle frames) will close Irish
operations and consolidate in Malta. - ST Microelectronics has closed N. American,
Singapore plants Malta seeing investment in 2002.
22Broad-based Direct Investment
- Dowty Automotive (O Rings) investing 11m, making
Malta a center for European operations - Toly Products (cosmetic packages) investing
US1.2 million. - Brandtstaetter(Playmobil moldings) investing
US13 million in Malta factory - Methode Electronics Malta (car switches) US10
million expansion. Just won GM 2001 Supplier of
the year 2000 Ford Excellence Awards. New orders
with Fiat. - Infratec Pro (scientific instruments) will invest
US1.4 million in expanding its Maltese
facilities.
23Malta as a Regional CenterMalta developing as a
hub for services and industry
- Bank of Valletta promotes Mediterranean banking
alliance. - Malta Stock Exchange is building capacity, and
fostering Mediterranean Alliance of Stock
Exchanges including Egypt and Tunisia. - Malta Shipping Register now worlds 4th largest.
- Lufthansa establishes aircraft service base in
Malta. - UCIMco to distribute cars to North Africa from
Malta. - Corinthia Hotels expanding operations in the
region Sandals of Mediterranean.
24Summary Conclusions
- Diversified economy softened 2000-2001 downturn
and helps upturn now underway. - Expect GDP recovery in 2002 close to 3 forecast
with growing consumption, steady export orders
and tourism , revival in construction. - Fiscal accounts largely on track for 4.6
deficit cost containment efforts continue and
numerous structural reforms underway. - EU application progresses, however national
elections and referendum will remain a cause of
uncertainty. - Malta winning new business in several areas,
creating positive signals for broad based
investment benefits only beginning to be felt
in economy.
25Thank you