This paper proposes that the Executive Board approve the disbursement of a second 6-month tranche of CCRT debt service relief to 28 of the 29 members, covering the period October 14, 2020 through April 13, 2021, given staff’s assessment that sufficient financial resources are available.2 In this context, the paper also provides brief updates for each beneficiary country on its policy responses to the pandemic and staff’s assessment of these policies and the use of resources freed up by debt service relief. It also provides an update on the finances of the CCRT and the fundraising efforts to secure adequate resources for grant assistance in the future. Based on grant pledges to date, resources are not sufficient to extend CCRT relief beyond the proposed second sixth-month period.
This 2020 Article IV Consultation focuses on Malta’s near and medium-term challenges and policy priorities and was prepared before coronavirus disease 2019 became a global pandemic and resulted in unprecedented strains in global trade, commodity and financial markets. Pursuing structural reforms is expected to help sustain Malta’s growth performance while promoting social inclusion. The focus should continue to be on encouraging female and elderly participation in the labor market, upskilling the labor force and stimulating innovation. Moreover, to safeguard the business climate, remaining governance shortcomings should be addressed without delay, including by stepping up the fight against corruption and by increasing the efficiency of the judicial system while ensuring its independence. Improving access to affordable housing remains a key priority in support of greater inclusion. It is imperative to maintain gradual consolidation to ensure a balanced structural budget excluding proceeds from the Individual Investor Program. The IMF staff suggests continuing addressing infrastructure needs while upgrading public investment efficiency. Improve fiscal risk analysis and management.
This Selected Issues paper analyses immigration and the labor market in Malta. This paper finds that immigration has been positive for Malta, as it has helped boost growth, employment, productivity and incomes. The increased availability of foreign labor has also helped contain wage inflation (and hence probably also price inflation) in recent years, contributing to maintain competitiveness in the face of a booming economy. The results suggest that foreign workers have helped contain aggregate wage inflation. The baseline regression includes as regressors the headline unemployment rate, lagged core inflation, labor productivity growth, the share of foreign workers in total employment, and the first and fourth lags of the dependent variable. The results across some selected models suggest that foreign labor has helped contain wage inflation in recent years. In order to identify the drivers of nominal wage growth, a decomposition analysis is conducted which allows calculating the contributions of each of the independent variables included in the regressions.
It has been two years since the trade tensions erupted and not only captured policymakers’ but also the research community’s attention. Research has quickly zoomed in on understanding trade war rhetoric, tariff implementation, and economic impacts. The first article in the December 2019 issue sheds light on the consequences of the recent trade barriers.
Mr. Serkan Arslanalp, Mr. Marco Marini, and Ms. Patrizia Tumbarello
Vessel traffic data based on the Automatic Identification System (AIS) is a big data source for nowcasting trade activity in real time. Using Malta as a benchmark, we develop indicators of trade and maritime activity based on AIS-based port calls. We test the quality of these indicators by comparing them with official statistics on trade and maritime statistics. If the challenges associated with port call data are overcome through appropriate filtering techniques, we show that these emerging “big data” on vessel traffic could allow statistical agencies to complement existing data sources on trade and introduce new statistics that are more timely (real time), offering an innovative way to measure trade activity. That, in turn, could facilitate faster detection of turning points in economic activity. The approach could be extended to create a real-time worldwide indicator of global trade activity.
International Monetary Fund. Monetary and Capital Markets Department
This technical note analyzes laws, policies, and procedures for bank failure mitigation and resolution, and for preparation and management of a financial crisis in Malta. It addresses the supervision of bank recovery plans, early intervention when problems are identified, resolution planning, resolution funding, and deposit insurance. Implementation of recovery planning requirements for banks remains a work in progress. Written policies and procedures should be adopted on the application of early intervention powers. While legal triggers and power for early intervention in problem banks are adequate, the powers in relevant legislation overlap substantially. Actions are needed to support the use of bank resolution powers, and to address weaknesses in the bank liquidation and insolvency framework. There is lack of clarity regarding the legal regime applicable to bank winding-up and insolvency, including as to the creditor hierarchy in liquidation. Impediments to implementation of the resolution tools are being identified and need to be addressed. Preparations need to be made for using the bridge institution resolution tool.