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How important are EU funds for Malta?
They are important for every country and help namely in two spheres: the first of which is solid infrastructure, through the European Regional Development Fund, and the second is soft investment such as training, scholarships, employment, reskilling and up-skilling. The economic growth achieved by this government and those before it is not only thanks to good practice and the creation of certain niche markets, but also thanks to EU funds.
I also think that, thanks to these EU funds, the citizens of Malta and Gozo, unlike in other countries, feel as if they are part of the European project. This is because wherever they go they can see the product of these funds – be it in roads, re-skilling, the tablets that their child uses at school, training given to nurses and doctors, MUZA, the Grand Master’s Palace: every industry and portfolio has taken advantage of EU funds.
Small and medium-sized enterprises (SMEs), for instance, have received €50 million in support whilst there has also been investment in improving the Ta’ Qali and Xewkija industrial parks. These are all projects through which workers, those looking for work and those wanting to increase their skills find EU funds backing them. EU funds have changed the face of Malta and I think Maltese and Gozitans feel more European – which is a feeling under threat in other EU countries – not just in terms of values and principles but also through their connection to the work that is supported by EU funds.
How much funding did Malta receive from the EU in the last EU Budget?
The EU Budget – known as the Multiannual Financial Framework (MFF) – is calculated every seven years. At the moment, we are in the cycle that runs from 2014 to 2020. In 2021, a new cycle will start which will then run to 2027. In early 2013, Lawrence Gonzi and his team managed to acquire around €1 billion. The circumstances at the time when the MFF was last drawn up were, of course, different than they are now: there was no Brexit, for instance, and there were different priorities, so it is difficult to compare the situation then to as it is now because it is not like-with-like. Back then, Brexit, for instance, was not on the cards. However, as Britain was the EU’s second largest contributor, the EU is now going to be left with a €13 billion annual vacuum.
How much funding are you anticipating that Malta will receive in the next cycle?
That is an answer I cannot give you, because we are still in negotiations. So far, the European Commission has put forward its proposals for the funds based on a formula called the ‘Berlin Method’. This method takes the GDP per capita of each country and compares it with the EU average GDP per capita to obtain a result. This method was used in 2012, when Malta’s GDP per capita was found to be 75 per cent of that of the EU. Today, that comparison stands at 90 per cent. EU funds are granted to countries so that they can come closer to being the best country economically, so if big steps have already been taken – as in Malta’s case – it is obvious that the country will receive less funding.
Obviously, the Maltese government is not content with what the Commission is offering: if we were, we would have said ‘thank you very much’ and taken what was being offered to us. We are not content because we believe that Malta needs another phase of solid funding to consolidate and sustain the current economic growth. As an economist, I can tell you that five years is not long enough to say that you’re home and dry: you need a longer span of years. Therefore we are arguing that a country such as Malta, which has managed to move forward to the point where it has the highest economic growth in the whole Eurozone, it does not make sense to leave the country jogging on the spot as has happened in the case of other countries.
Our point of view is that it makes more sense to give more funding in order that economic growth can be further sustained and consolidated so that in the future it can be definitively said that Malta can move forward without a certain amount of help.
We have also made mention of elements that do not necessarily have to do with our GDP: challenges related to infrastructure, early school-leavers, climate change, Brexit and other old vulnerabilities – such as being an island state.
So far, the Commission has said that it is willing to give us funds only as per the Berlin Method, but this may change as we negotiate. Thus far, not even the maximum package ceiling per country has been agreed, with the Commission stipulating that it is ready to spend 1.1 per cent of the gross national income (GNI) levied from each country. There has been disagreement on this figure however: countries such as Belgium, Austria, Sweden, the Netherlands and Luxembourg – known as ‘the Frugals’ – want spending to be capped at one per cent of the GNI, whilst the European Parliament has been extremely ambitious and said that it wants up to 1.3 per cent of the GNI in spending. From what I understand, however, we will probably end up with something close to what the European Commission is proposing.
What is important is that an agreement on funding is reached by the autumn of this year, as anything other than that would result in the delay of our planned programmes. Such delays happened during the last period when, due to a lack of an agreement, the money from the EU arrived in 2017 rather than in 2014.
Up until then, however, the negotiations on our part will continue: we are meeting different countries and travelling to the respective presidencies to continue discussions. Where exactly we are going to land however is anyone’s guess at the moment.
Are there any specific projects that the