Photo: European Commission’s Director of the Economic and Financial Affairs Directorate General, Istvan Szekely.

Malta’s “outstanding” economic performance may be threatened by the island’s infrastructural weaknesses and its shortcomings in fighting corruption, according to a major European Commission report. 

The annual European Semester Country Report, known for its diplomatic wording, warned of Malta’s “fragmented landscape of anti-corruption institutions”. 

“Ensuring a strengthened supervisory framework is crucial to preserve Malta’s good reputation and attractiveness as an international financial centre,” the report says. 

It pointed out the lack of formalised institutional coordination “may hamper effective investigation and prosecution of corruption allegations”, while effective financial supervision also “remains a challenge”, particularly for a country whose financial sector is so important. 

The report pointed out that the MFSA (Malta Financial Services Authority) “seems “understaffed” to ensure effective supervision of a large number of foreign financial companies, including banks and insurance companies.

“Lack of human and financial respires may undermine the effectiveness of supervision, especially in the insurance sector, with potential consequences across the Single Market, given the focus on cross-border business. Ensuring an effective legal framework to combat money laundering remains critical, given the size of Malta’s financial sector.”

“Ensuring an effective legal framework to combat money laundering remains critical, given the size of Malta’s financial sector.”

The report also spoke about Malta’s “fragmented” anti-corruption institutions and the problematic designs of some of these institutions. 

“The Commissioner of Police and the Attorney General are appointed by the government and the Permanent Commission Against Corruption is designed to report its findings to the government. Other organisations competent for processing information on corruption allegations in their own competence have faced challenges in conducting thorough enquiries because of lack of necessary means, powers or resources. The absence of established procedures to ensure independent treatment of cases in responding to corruption allegations may result in inconsistencies in handling corruption allegations,” the European Commission said. 

The document also singles out other economic challenges, including the island’s surging house prices, the increased skills shortage being reported by many local companies, as well as the traffic congestion that has become a barrier to investment. 

The executive summary ends with this warning: “Increased economic activity may exacerbate existing bottlenecks, including in infrastructure, and put further pressure on environmental resources…. If not addressed, bottlenecks in natural resources and infrastructure may also affect the development of the tourism sector, still a key pillar of the Maltese economy.”

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Chris Peregin

Christian is an award-winning journalist and entrepreneur who founded Lovin Malta, a new media company dedicated to creating positive impact in society. He is passionate about justice, public finances and finding ways to build a better future.