During the past few weeks, Malta participated in a four-day summit in Brussels, for which the Parliamentary Secretary for EU Funds Stefan Zrinzo Azzopardi remarked, “Malta expects a fair and just deal on the Multiannual Financial Framework and the Recovery Fund, which addresses Malta’s concerns”.
The negotiations resulted in Malta obtaining the biggest allocation of EU funds since Malta’s accession to the EU and double the funds allocated in the last EU budget.
Malta’s GDP per capita has increased drastically over the past years, reaching 96 per cent of the EU average in 2019. That strong economic showing, together with a €75 billion budget gap caused by the UK’s decision to exit the EU, were expected to complicate negotiations for Malta. Yet, Malta managed to obtain a financial package worth €2.25 billion.
This includes €1.92 billion from the EU’s budget, the multiannual financial framework, and €327 million from the newly established recovery package known as Next Generation EU to assist in the recovery from the COVID crisis. The package does not include a further €92 million in cohesion funds allocated to Malta as part of the EU’s coronavirus recovery stimulus. When factoring in the €1.2 billion that Malta pays to the EU, it means that Malta will receive a net amount of €1.035 billion from the EU.
Although the EU budget is allocated to each EU member state, spending will be closely controlled and must be devoted to policies seen as compatible with European priorities. The factors that shift the priority of the budget is the basis of what member states ultimately agree on in the EU’s long-term strategy. The strategic agenda agreed shapes the main priorities and areas that the EU will focus on. The budget is then used to implement policies to achieve the objectives set out.
The current budgetary period – 2014 to 2020 – was agreed at a time when Europe was still coming out of a global recession, hence the focus was mainly on generating employment and economic growth. There are different realities to factor into the upcoming budget – there are the realities of COVID-19 crisis, climate change, and issues related to migration and security.
This budget allocation is a vital milestone for the country as it can continue to support the growth of the country’s economy at this crucial time. EU funding support job creation, business competitiveness, economic growth, sustainable development, and also further improve Maltese citizens’ quality of life, education and skills. It also contributes to Malta’s infrastructure, agriculture and fisheries and improves the level of services provided in healthcare, education, and transport. EU funds also contribute to the development of improved facilities for Malta’s tourism industry, which is considered vital given its importance to the local economy.
Malta’s small size and high urban density pose significant challenges for the country’s transport sector. Hence, EU funds help optimising the connectivity of the Maltese Islands, both domestically and internationally, through investments that help to reduce bottlenecks and journey times, among others.
The health sector is also a main priority, especially since it ensures a more socially inclusive society. Additional investments will be implemented to improve health-care services in Malta and ensure the provision of community-based services.
Another important pillar is the environment in which a number of initiatives using EU funds have been undertaken to encourage the generation of clean energy and the introduction of energy-efficiency practices as well as to manage the challenges faced by waste and water scarcity that Malta faces. The positive results obtained will continue to flourish with interventions and initiatives by encouraging energy savings and promoting energy-efficiency systems as well as reducing the amount of waste and divert remaining residues for recycling.
Malta can also benefit from direct funds, where Maltese organisations compete with other European organisations for different funding programmes. An example is the Erasmus+ programme and the Horizon 2020, which the latter is centered on research and innovation.
The Maltese economy has benefited hugely from the accession to the EU’s market. A healthy and unprecedented net inflow of billions in European funds for a whole range of environmental, agricultural and infrastructure projects and significant inflows of foreign direct investment have transformed the Maltese economy.
