Lawrence Gonzi, prime minister, Malta

Lawrence Gonzi, prime minister, Malta

Malta has done well out of EU and eurozone membership, with clear benefits accruing not only to the financial services sector, but also to tourism and other sectors, as its prime minister, Lawrence Gonzi, explains.

Dr Lawrence Gonzi has been prime minister of Malta since 2004 and presided over the country’s adoption of the euro. Membership of the EU and the eurozone are not universally supported in Malta, but there is a large degree of consensus on the fact that both have been tremendously successful in enabling Malta, the EU’s smallest state by population and area, to punch far above its weight.

“Malta has not only managed to weather the economic turbulence but emerged stronger than other developed economies,” says Mr Gonzi. “With faster growth rates than the European and eurozone averages throughout 2010, and an improving labour market, Malta’s economic progress is being confirmed. The latest data shows that over the past year Malta has had the fastest employment growth rate – 3.4% – in the EU, and also the fourth lowest unemployment rate.”

The prime minister attributes these trends to the country’s membership of the EU, which it joined in 2004, and the eurozone, which it joined four years later, along with “targeted, timely and temporary support measures” implemented by the Maltese government. Fiscal discipline has also benefited the economy – Malta is one of only three EU countries that reduced its fiscal deficit in the period between 2008 and 2010.

Regime changes in Tunisia and Egypt and civil war in Libya have thrust Malta onto the global stage because it is so close to north Africa and has long-standing trading and investment relationships with the region, in particular Libya. “Malta has close ties with north Africa, and we are concerned about the events that have taken place,” says Mr Gonzi. “We have witnessed a humanitarian crisis unfold and are now seeing the effects through migratory flows to Europe with all the risks this brings.”

Welcome arrivals

The sort of visitors Malta wants, of course, are tourists, and recently the country has been doing better than ever in attracting them. “Last year was a record year for Malta’s tourism industry, surpassing all records in terms of bed nights, arrivals and spending,” says Mr Gonzi.

Malta's key tourism statistics

The increases are partly down to a well-designed promotional and investment strategy, one that has been praised by the United Nations World Tourism Organisation. The strategy sought to increase both Malta’s visibility and accessibility, with record budgets being allocated to tourism and tourism-related infrastructure projects.

“We are successfully moving away from the traditional sea-and-sun label that Malta was traditionally known for. Our advantage is not just our beaches and good climate in isolation, but also our culture, history, archaeology and small size,” says Mr Gonzi. That is why visitors to Malta cannot avoid all the renovation and rebuilding work that is going on at the moment, the focus of which is on the capital Valletta. 

“We commissioned Renzo Piano to design a new entrance to Valletta, regenerate and develop the old opera house ruins and build a new parliament,” says Mr Gonzi. “We are investing in Valletta’s accessibility through a vertical connection that will connect the Grand Harbour to the centre of Valletta through a panoramic lift. We are spending €36m restoring our old fortifications, where we will introduce a learning experience through special interactive centres and attractions.”

The business of money

The financial sector has long been a key component of Malta's economy and has grown rapidly. The domestic market for financial services is naturally small, but the international market is large. “Since we joined the EU, our passporting rights have allowed financial institutions based here to offer their services throughout the single market,” says Mr Gonzi. “This effectively eliminates the issue of smallness in our domestic market, since we now have the entire EU single market to operate in.

“Now that we live in an age where all financial services business is carried out electronically, geographical location and market size are not as important. Malta offers a strong skill base, IT infrastructure and favourable tax regime that international firms find attractive.”


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