In an effort to decouple economic growth from environmental degradation, public expenditure is
redirected towards improving the environment. In this context, priorities include the development of a
National Biodiversity Action Plan, carrying out marine scientific surveys for Special Areas of
Conservation, developing a Regional Project for Marine and Coastal Protected Areas, strengthening the
institutional capacity for the implementation of the Nature Protection Acquis, and the treatment of
sewage in Malta and Gozo.
Malta has drafted its first Environmental Technologies Action Plan (ETAP) which includes a number of
fiscal incentives so as to further promote technologies that have a positive impact on the Maltese
environment. The sourcing of environmentally friendly products which in turn promotes environment
technologies is also being pursued by Government through the preparation of a Green Public
Procurement Plan. The Polluter Pays Principle is another action which is being pursued by Government
in order to improve the environment. Between 2005 and 2007, the Malta Environment and Protection
Authority in collaboration with the Ministry of Finance has implemented an EU-funded project entitled
“Building Capacity to Introduce the Polluter Pays Principle through Economic Instruments to Implement
the EU Environment Acquis”. The overall objective of this project was to build the necessary capacity in
the Maltese Government to devise and implement a package of environmental economic instruments
applying the Polluter Pays Principle in practice. The Malta Environment and Planning Authority plays
regulatory and watchdog roles to ensure that the country’s regulations for the environment sector are
adhered to.
Malta is also contributing towards the fight against climate change by tackling waste management,
transport and better utilisation of non-conventional sources of water. Malta is at the moment in the
process of rehabilitating former dump sites. These dump sites shall be rehabilitated through the capturing
of methane and landscaping. Moreover, Government has also embarked on a waste separation
educational campaign. With the significant rise in oil prices and the growing concern about stable, secure
and environmentally friendly energy supplies, the promotion of bio fuels use in transport is being given
importance. In order to further promote bio fuels, Government has exempted a 1 per cent excise duty on
bio fuels. This has led to an increase in the demand of bio fuels from 0.1 per cent in 2004 to 0.25 per cent
of total fuel sales in 2005.
3. Implementation
The conduct of an appropriate fiscal policy with a view to attaining sound and sustainable public finances
is a crucial element in Malta’s economic policy making. In the short-run, fiscal policy plays an important
role in achieving a growth supportive environment. In the long-term, fiscal policy coupled with adequate
structural and labour market reform measures, helps to achieve national economic policy objectives.
The Maltese Government attaches importance to fiscal governance in order to ensure that the budgetary
targets are achieved. Furthermore, the effective and efficient functioning of public administration,
encompassing accountability and control, the measurement of results, public sector employment
practices and transparency in government activities, play an important role in achieving a growth
supportive environment. In this context, the Maltese Government recognises the need of a consistent and
transparent administration of public finances, supported by an appropriate institutional framework.
3.1. Budgetary procedure
Planning of public expenditure and revenue takes place through three-year Business and Financial Plans
prepared by Ministries and Government Departments in perspective of Government’s overall economic
and social targets within the framework of the fiscal consolidation process. These Financial Business
Plans are in turn reflected in the Budget presented and discussed on an annual basis in Parliament, with
discussions leading to the approval of the Financial Estimates of the various Ministries.