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Euro zone


Malta on the threshold of euro zone

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Julian Christopher Zarb  Dec 18, 2007

VALETTA, Malta (eTN) - Three years after joining the European Union, Malta and Gozo are poised to enter another interesting epoch in the island’s history, as from January 1, 2008, the smallest member of the EU will also join the euro zone.

The Maltese government has been working up to this moment. Two years ago, the National Euro Changeover Committee (NECC) took on the role of the organization that would prepare for this change. Perhaps the greatest fear that had to be alleviated was the perception that the euro may increase the cost of living, but those involved in the tourism industry could see a number of benefits in joining the second largest currency in the world. When one considers that the major source of the tourism market to the islands originates from Europe, the fact that there will no longer be transaction costs, and that visitors should feel comfortable with a currency they are used to should improve the industry.

The international situation that was brought about by the increases in market prices for cereals and oil could not have come at a worse time for Prime Minister Lawrence Gonzi, with a general election looming next year. But, Prime Minister Gonzi has the situation under control with various programs in place such as price monitoring and a special help line for citizens worried about the euro changeover which has received a large number of calls from every town and village the NECC has opened information offices to help those who still feel this new currency may be too daunting.

The fact remains, however, that an island state like Malta and Gozo will only find true economic and social stability once it joins the euro zone. Shops and small businesses that make up a large part of the commercial sector have already joined the FAIR scheme, an initiative that was initiated by the Ministry for Finance to ensure that consumers are well informed about the price of goods and services that are marked in both the old Maltese Lira and the euro using an exchange rate that was agreed with the Central Bank of Malta. A number of shops have also agreed and committed to keeping prices unchanged during the initial stages of the euro implementation.

Dealing with tourism operators throughout Europe will no longer incur longwinded calculations to allow for exchange rate fluctuations and transaction costs. This certainly will be a good motivator for both the customer and the agent. The advent of low-cost carriers to the island nation earlier this year has meant that finally the islands can offer a more individual package to visitors and this should improve the cash flow and the general state of the economy given the multiplier effect this industry commands here.

Whatever the case , for now the celebrations planned for December 31 will launch the islands into an interesting year and one that should surely improve the attraction of Malta and Gozo, at least in economic terms.

Malta on the threshold of euro zone
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