European Semester Report 2022
Country Report and Specific Recommendations to Member States including Malta
The European Commission has just published its 2022 European Semester Spring Package. The European Semester is the annual cycle of economic, fiscal, employment and social policy coordination across the European Union, established in 2010, it has become a well-established process for the Member States under a common annual timeline.
This European Semester package, which includes Country Reports for each of the Member States and Country-Specific Recommendations, including for Malta, must be taken in the context of a European Union that is coming out of the COVID-19 pandemic and in the midst of Russia's ongoing invasion of Ukraine.
While the EU economy continues to show resilience and growth, as shown in the Spring 2022 Economic Forecast, Russia's war of aggression against Ukraine has created a new environment, exacerbating pre-existing headwinds to growth, which were previously expected to subside. It also poses additional challenges to the EU economies related to security of energy supply and fossil fuel dependency on Russia.
The Country-Specific Recommendations adopted in the context of the European Semester provide guidance to Member States to adequately respond to persisting and new challenges and deliver on shared key policy objectives. This year, they include recommendations for reducing the dependency on fossil fuels through reforms and investments, in line with the REPowerEU priorities and the European Green Deal. Particularly for Malta, it is being highlighted in the country-specific report that the country starts taking action in 2022 and 2023 to proceed with the implementation of its recovery and resilience plan (RRP), which includes a number of measures to address a series of its structural challenges.
Country Report and Recommendations for Malta
Fiscal policy guidance
As part of the Package, the European Commission decided to prolong into 2023 the general escape clause of the Stability and Growth Pact, activated in March 2020, allowing Member States to react swiftly and adopt emergency measures to mitigate the economic and social impact of the pandemic.
In the Country Report for Malta, it is being recommended that the fiscal sustainability of the pension, health and long-term care systems, is strengthened and maintains its adequacy.
The Country Report also recommends that in 2023, Malta should ensure that the growth of nationally financed current expenditure is in line with an overall neutral policy stance. It also recommends that Malta stands ready to adjust current spending to the evolving situation, expand public investment for the green and digital transition and for energy security, and pursue a fiscal policy aimed at achieving prudent medium-term fiscal positions.
Compliance with the deficit and debt criteria of the Treaty
The Commission has adopted a report under Article 126(3) of the Treaty on the Functioning of the EU (TFEU) for 18 Member States, including Malta. The purpose of this report is to assess Member States' compliance with the deficit and debt criteria of the Treaty. The Commission does not propose to open new excessive deficit procedures and will reassess Member States' budgetary situation in the autumn of 2022.
Addressing macroeconomic imbalances
The Commission has assessed the existence of macroeconomic imbalances for the 12 Member States selected for in-depth reviews in the 2022 Alert Mechanism Report. Notably, Ireland and Croatia are no longer experiencing imbalances.
The Commission is also proposing guidelines, in the form of a Council decision for Member States' employment policies in 2022. Every year, these guidelines set common priorities for national employment and social policies to make them fairer and more inclusive. Member States will now be called to approve them.
This year, the Commission also proposes to update the guidelines for Member States' employment policies with a strong focus on the post-COVID 19 environment, on making the green and digital transitions socially fair, as well as on reflecting recent policy initiatives, including in response to Russia's invasion of Ukraine.
In Malta’s Country Report, it is being recommended that the country boosts its innovation, by strengthening public-private cooperation and the conditions for attracting and retaining talent.
Progress towards the UN Sustainable Development Goals (SDGs)
The 2022 European Semester cycle provides updated and consistent reporting on progress towards the achievement of the SDGs across Member States. Specifically, the Country Reports summarise the progress of each Member State towards implementation of the SDGs.
In general, further efforts will be necessary to achieve the Goals, in particular in the environmental area like clean water and sanitation (SDG 6) and life on land (SDG 15).
In the Country Report for Malta, it is being recommended that Malta would benefit from creating the effective conditions to meet EU municipal, packaging and landfill targets on a sustainable basis and by reinforcing climate adaptation, most notably as regards flooding risks.
Notably, the report proposes that Malta reduces the overall reliance on fossil fuels by accelerating the deployment of renewables, promoting and enabling investments in wind and solar energy, further upgrading Malta’s electricity transmission and distribution grids, and creating incentives for electricity storage to supply firm, flexible and fast-responding energy. It also recommends that there is a reduction in energy demand and a reduction of emissions from road transport.
The Commission invites the Eurogroup and EU Council to discuss the package and endorse the guidance offered today. It looks forward to engaging in a constructive dialogue with the European Parliament on the contents of this package and each subsequent step in the European Semester cycle.
For more detailed information on the European Semester Spring Package 2022 click here.
To view the Country Report for Malta click here.
To view the Country-Specific Recommendations for Malta click here.