MALTA

The Republic of Malta

Repubblika Ta' Malta

CAPITAL: Valletta

FLAG: The national flag consists of two equal vertical stripes, white at the hoist and red at the fly, with a representation of the Maltese Cross, edged with red, in the canton of the white stripe.

ANTHEM: L'Innu Malti (The Maltese Hymn).

MONETARY UNIT: The Maltese lira (lm) consists of 100 cents, with each cent divided into 10 mils. There are coins of 2, 3, and 5 mils and of 1, 2, 5, 10, 25, and 50 cents, and notes of 2, 5, 10, and 20 lira. Gold and silver coins of 1, 2, 4, 5, 10, 20, 25, 50, and 100 lira also are in circulation. ml1 = $2.70270 (or $1 = ml0.37) as of 2005.

WEIGHTS AND MEASURES: The metric system is the legal standard, but some local measures are still in use.

HOLIDAYS: New Year's Day, 1 January; National Day, 31 March; May Day, 1 May; Assumption, 15 August; Republic Day, 13 December; Christmas, 25 December. Movable holidays include Good Friday.

TIME: 1pm = noon GMT.

LOCATION, SIZE, AND EXTENT

Malta lies in the central Mediterranean Sea, 93 km (58 mi) south of Sicily and 290 km (180 mi) from the nearest point of the North African mainland. There are three main islands—Malta, Gozo to the nw, and Comino between them—as well as two small uninhabited islands, Cominotto and Filfla. Extending for 45 km (28 mi) se–nw and 13 km (8 mi) ne–sw, Malta's total area is 316 sq km (122 sq mi)—Malta, 245.7 sq km (94.9 sq mi); Gozo, 67.1 sq km (25.9 sq mi); Comino, 2.8 sq km (1.1 sq mi). Comparatively, the area occupied by Malta is slightly less than twice the size of Washington, DC. The total coastline is 252.81 km (157 mi).

Malta's capital city, Valletta, is located on the east coast of the island of Malta.

TOPOGRAPHY

The islands of Malta are a rocky formation (chiefly limestone) running from east to northeast, with clefts that form deep harbors, bays, creeks, and rocky coves. The highest point of the nation is Ta'Dmejrek (253 m/803 ft), located on the southwest shore of Malta. Beaches range from rocky to sandy terrain. The northern beach of Ramla Bay is known for its red sands.

CLIMATE

The climate is typically Mediterranean, with fairly hot, dry summers and rainy, mild winters. The average winter temperature is 9°c (48°f); the average summer temperature, 31°c (88°f). Rainfall occurs mostly between November and January and averages about 56 cm (22 in) per year.

FLORA AND FAUNA

The islands are almost treeless. Vegetation is sparse and stunted. Carob and fig are endemic and the grape, bay, and olive have been cultivated for centuries. There are some rock plants.

The weasel, hedgehog, and bat are native to Malta. White rabbits and mice have been introduced. Many types of turtles, tortoises, and butterflies and several varieties of lizard also are found. Common varieties of Mediterranean fish, as well as the seal and porpoise, inhabit the surrounding waters.

ENVIRONMENT

Malta's most significant environmental problems include inadequate water supply, deforestation, and the preservation of its wildlife. The country's extremely limited fresh water resources have led to increasing dependence on desalination. The nation's agriculture suffers from lack of adequate water for crops due to limited rainfall.

Malta was one of the first countries to ratify the 1976 Barcelona Convention for the protection of the Mediterranean from pollution. Malta's government has made recent efforts to control environmental damage including passage of the Environmental Protection Act of 1991 and the creation of a Ministry for the Environment. The Ministry of Health and Environment belongs to the International Union for the Conservation of Nature and Natural Resources. In cooperation with the World Wildlife Fund, the Ghadira wetland area was made a permanent nature reserve in 1980.

According to a 2006 report issued by the International Union for Conservation of Nature and Natural Resources (IUCN), threatened species included 1 type of mammal, 10 species of birds, 11 species of fish, and 3 types of mollusks. Endangered species include the slender-billed curlew, Mediterranean monk seal, hawksbill turtle, and Atlantic ridley.

POPULATION

The population of Malta in 2005 was estimated by the United Nations (UN) at 405,000, which placed it at number 165 in population among the 193 nations of the world. In 2005, approximately 13% of the population was over 65 years of age, with another 18% of the population under 15 years of age. There were 99 males for every 100 females in the country. According to the UN, the annual population rate of change for 2005–10 was expected to be 0.2%, a rate the government viewed as satisfactory. The projected population for the year 2025 was 396,000. The population density was 1,266 per sq km (3,278 per sq mi), which makes it one of the most densely populated countries in the world.

The UN estimated that 91% of the population lived in urban areas in 2005, and that urban areas were growing at an annual rate of 0.56%. The capital city, Valletta, had a population of 83,000 in that year. Other major cities (and their estimated populations) include Birkirkara (25,000), Qormi (19,900), and Sliema (14,000).

MIGRATION

High population density and unemployment have led to emigration. Most foreigners living in Malta are British nationals and their dependents. Malta has no national refugee law, and all recognized refugees in Malta are resettled in third countries. Since 1983, Malta has received some 2,400 asylum applications. Of these, 1,860 have been resettled. The total number of migrants in 2000 was 9,000. In 2004 refugees in Malta numbered 1,558. There were 141 asylum seekers in that same year. Migration News reported that Malta had allowed asylum seekers to stay up to three years, but recent influxes of boatloads of migrants from Africa resulted in migrants held in detention centers, and Malta's threat in August 2005 to suspend its obligations under the 1951 Geneva refugee convention. In 2005 the net migration rate was 2.06 migrants per 1,000 population. The government views the migration levels as satisfactory. In 2003 remittances to Malta were $633,760.

ETHNIC GROUPS

Most Maltese are believed to be descended from the ancient Carthaginians and Phoenicians, but there are strong elements of Italian and other Mediterranean stock. A few thousand people are of Arab, African, or Eastern European origin.

LANGUAGES

Maltese, a Semitic language with Romance-language assimilations, is the national language and the language of the courts. Maltese and English are both official languages.

RELIGIONS

Roman Catholicism is the official state religion, but there is freedom of worship for all faiths. An estimated 95% of the population is Roman Catholic, with about 63% actively practicing. Most of the Protestants in the country are not Maltese; British retirees and vacationers from other countries tend to form the Protestant population. Jehovah's Witnesses, the Church of Jesus Christ of Latter-day Saints, the Fellowship of Evangelical Churches, and the Bible Baptist Church have active groups on the island. There is one Muslim mosque and one Jewish congregation. Zen Buddhism and the Baha'i Faith are also represented.

TRANSPORTATION

Malta has no railways. In 2003, there were 2,254 km (1,402 mi) of roadways, of which 1,973 km (1,227 mi) were paved. Passenger cars in 2003 totaled 200,509, while there were 44,586 commercial vehicles in use that same year. Ferry and hydrofoil services connect Malta and Gozo.

The harbors of Valletta, among the finest in the Mediterranean, are a port of call for many lines connecting northwestern Europe and the Middle and Far East. Roughly 3,000 ships dock at Valletta each year. As of 2005, a total of 1,140 vessels of 1,000 GRT or more totaling 27,208,819 GRT were registered in Malta (a flag of convenience registry with ships from 49 countries). There was one airport in 2004, the principal airport at Luqa. A new terminal is designed to handle 2.2 million passengers per year (or 2,000 at any given moment). The national air carrier is Malta Airlines. In 2001 (the latest year for which data was available), 1,405,200 passengers were carried on scheduled domestic and international airline flights.

HISTORY

The strategic importance of the island of Malta was recognized in the time of the Phoenicians, whose occupation of Malta was followed by that of the Greeks, the Carthaginians, and the Romans. The apostle Paul was shipwrecked at Malta in ad 58, and the islanders were converted to Christianity within two years. With the official split of the Roman Empire in 395, Malta was assigned to Byzantium, and in 870 it fell under the domination of the Saracens. In 1090, it was taken by Count Roger of Normandy, and thereafter it was controlled by the rulers of Sicily—Norman and, later, Aragonese. The Emperor Charles V granted it in 1530 to the Knights of St. John, who had been driven from Rhodes by the Turks. The Knights surrendered Malta to Napoleon in 1798. Two years later, the British ousted the French garrison, with the aid of a revolt by the Maltese people. British possession of Malta was confirmed in 1814 by the Treaty of Paris.

During almost the entire 19th century, a British military governor ruled the colony. After World War I, during which the Maltese remained loyal to Britain, discontent and difficulties increased. The 1921 constitution granted a considerable measure of self-government, but political tensions reemerged, and the constitution, after having twice been suspended, was revoked in 1936. A new constitution in 1939 reinstated Malta as a British crown colony. In World War II the Maltese again remained loyal to the United Kingdom, and for gallantry under heavy fire during the German-Italian siege (1940–43), the entire population was awarded the George Cross.

Substantial self-government was restored in 1947. The Maltese, however, carried on negotiations with the United Kingdom for complete self-government, except in matters of defense and foreign affairs. In August 1962, Prime Minister Borg Olivier requested the United Kingdom to grant Malta independence, and Malta became a sovereign and independent nation within the Commonwealth of Nations on 21 September 1964. At the same time, mutual defense and financial agreements were signed with the United Kingdom. Under subsequent accords negotiated between 1970 and 1979, British troops withdrew from Malta, and the NATO naval base on the main island was closed.

On 13 December 1974, Malta formally adopted a republican form of government, and the former governor-general, Sir Anthony Mamo, became the first president. Dom Mintoff, leader of the Malta Labor Party and prime minister from 1971 through 1984, instituted socialist measures and initiated a nonaligned policy in foreign affairs. Although the Labor Party narrowly lost the popular vote in the 1981 elections, it retained its parliamentary majority; to protest the gerrymandering that allegedly made this possible, the opposition Nationalist Party boycotted parliament, and strikes and civil violence ensued. In January 1987, a new law guaranteed that, following future elections, the new government would be formed by the party that won a majority of the popular vote.

On 23 November 1985 Malta became the scene of one of the deadliest hijackings in history, when an Egypt Air flight commandeered by three Palestinian terrorists was forced to land there. In a gun battle, an Egyptian sky marshal on the plane shot and killed the hijackers' leader, and the pilot landed the plane in Malta. After an Israeli and an American passenger were executed, Egyptian commandos set off an explosive charge and rushed the plane, but 57 passengers and another hijacker died in the raid from smoke inhalation, explosive wounds, or gunshots. The surviving hijacker, Omar Mohammed Ali Rezaq, was released from prison by Maltese authorities in 1993 under a general amnesty program. He was later apprehended in Nigeria and extradited to the United States for air piracy, and convicted and sentenced in 1996.

In May 1987, the Nationalist Party won a popular majority but only 31 of 65 seats in parliament. In accordance with the new law, the Nationalists were given four additional seats, for a total of 35 in an expanded 69-seat parliament, and the Nationalist Eddie Fenech Adami became prime minister, replacing the Laborite Carmelo Mifsud Bonnici. The Nationalists were returned to power in February 1992 with a slightly higher majority. Eddie Fenech Adami remained prime minister. Vincent Tabone, president, had been elected in 1989.

Maltese politics have revolved around foreign policy issues, in particular, Malta's relationship with Europe. The Nationalist Party government has been a strong proponent of EU membership. In July 1990, Malta applied for full membership in the European Union. However, after the Labor Party won the 1996 elections, the government's stance shifted towards maintaining neutrality. The Labor government also adopted economic policies, such as raising utility rates, that alienated both the electorate and elements within its own party, which withdrew their support for Prime Minister Alfred Sant. He called new elections three years ahead of schedule, in September 1998, and the Nationalist Party won a majority in a vote seen at least partly as a referendum on the European Union membership question. In March 1999, Guido de Marco of the Nationalist Party was elected president by the House of Representatives. Having regained the post of prime minister, NP leader Fenech Adami moved to reactivate Malta's EU membership application and adopted policies—such as the reimposition of a controversial value-added tax—intended to pave the way for membership approval. Malta was one of 10 new candidate countries formally invited to join the European Union in December 2002. Malta held its referendum on EU membership on 8 March 2003, with 53.6% voting in favor of joining the body versus 46.4% against. Malta became an official member on 1 May 2004.

Elections were held on 12 April 2003, resulting in a win for the Nationalist Party (35 seats); the Labor Party received 30 seats. The next scheduled elections for the legislature were to take place in April 2008. On 29 March 2004, the House of Representatives elected a new president, Eddie Fenech Adami; Lawrence Gonzi, former deputy prime minister, took over the post of prime minister. The next presidential elections were scheduled to take place in 2009.

GOVERNMENT

The Malta independence constitution came to force on 21 September 1964. Ten years later, Malta became a republic, while remaining within the Commonwealth of Nations. The unicameral parliament, the House of Representatives, consists of 65 members elected for a five-year term by universal adult suffrage (18 years of age and over), under a system of proportional representation. Additional seats may be allocated until a majority of one seat is obtained.

The House elects the head of state, the president of the republic, who holds office for five years. The president appoints the prime minister and, on the latter's advice, the other members of the cabinet. The prime minister, who is the leader of the majority party, is responsible for general direction and control of the government.

POLITICAL PARTIES

There are two major political parties, the Nationalist Party (NP) and the Malta Labor Party (MLP), which have alternated in political power. The Nationalist Party was returned to government in 1987 after 16 years of Labor Party rule, and won reelection in February 1992 with a three-seat majority (34 to 31) in parliament. The MLP regained control in October 1996 but lost it again following early elections held in September 1998, which the NP won by a five-seat margin. Elections held in April 2003 returned the NP to power; it took 35 seats in the House of Representatives to the MLP's 30. The next elections were scheduled for 2008.

Parties not represented in parliament include Democratic Alternative (AD), Malta Democratic Party (PDM), and the Malta Communist Party (PKM).

After the elections of 1996, MLP leader Alfred Sant became prime minister after a narrow upset victory (official results gave the MLP 50.72% of the vote). The MLP campaigned for Maltese neutrality by pledging to stop efforts to join the European Union, to end Malta's associate membership with NATO, and to seek closer ties with Libya. Following the NP victory in the 1998 election, party leader Eddie Fenech Adami was returned to the post of prime minister and took steps to reactivate Malta's application for EU membership. When voters approved EU membership in a March 2003 referendum, Fenech Adami looked upon the NP win in the April 2003 elections as a confirmation of Malta's desire to join the European Union.

LOCAL GOVERNMENT

Local government was established in 1993 with the approval of the Local Councils Act, setting up 68 local councils in Malta; there are 54 on the main island of Malta, and 14 in Gozo.

JUDICIAL SYSTEM

The superior courts consist of a Constitutional Court (with the power to review laws and executive acts), two courts of appeal, the civil court, court of magistrates, criminal court, and special tribunals. The president, on the advice of the prime minister, appoints the chief justice and 16 judges. Retirement is at age 65 for judges and age 60 for magistrates. The judiciary operates in an independent manner. Defendants in criminal cases have the right to counsel of choice. Indigent defendants are afforded court-appointed counsel at public expense.

The constitution guarantees the right to free speech, assembly and association. Trade unions are legal and limits on the right to strike were eased in 2002. However, the law permits compulsory arbitration to be held even if it is requested by only one of the parties involved, this is against the International Labor Organization's principles.

Divorce is illegal on the island and violence against women continues to be a problem. Malta is a member of most international organizations including the UN and the WTO.

ARMED FORCES

The armed forces of Malta numbered 2,237 in 2005 and were divided into three regiments. Malta's defense budget in 2005 totaled $48.5 million. Equipment included eight patrol/coastal vessels, two transport aircraft, and seven utility helicopters. Italy has 49 military personnel stationed in Malta.

INTERNATIONAL COOPERATION

Malta joined the United Nations on 1 December 1964 and participates in ECE and several nonregional specialized agencies, such as the FAO, IAEA, World Bank, ILO, UNESCO, UNIDO, and the WHO. Malta is also a member of the Commonwealth of Nations, the Council of Europe, the European Bank for Reconstruction and Development, the Alliance of Small Island States (AOSIS), and the OSCE. Malta joined the European Union in 2004. The country is an observer affiliate in the Western European Union. Malta is a part of the Nonaligned Movement. The nation also participates in the Nuclear Suppliers Group (London Group) and the Organization for the Prohibition of Chemical Weapons.

In environmental cooperation, Malta is part of the Basel Convention, Conventions on Biological Diversity and Air Pollution, Ramsar, CITES, the London Convention, the Kyoto Protocol, the Montréal Protocol, MARPOL, the Nuclear Test Ban Treaty, and the UN Conventions on the Law of the Sea, Climate Change, and Desertification.

ECONOMY

Malta has few natural resources besides limestone. Agriculture is limited by the rocky nature of the islands, and most food must be imported. Industrial raw materials are lacking and also must be imported. Until 1964, the dominant factor in the economy was the presence of British military forces; with the withdrawal of UK military personnel by 1979, the dockyards were converted to commercial use. Malta's economy now relies on light industry, tourism, and other service industries, in addition to shipbuilding, maintenance, and repairs. The government holds shares in a variety of enterprises, including joint ventures. A stock exchange opened in 1992.

In 2001 GNP per capita (purchasing power parity) was $15,000. That same year, GDP real growth was estimated at 4%. Agriculture contributed 3% to GDP, industry amounted to 23%, while services were 74%. Malta became a full member of the European Union in May 2004.

The country's economic performance in recent years has been anything but spectacular. While in 2002, the GDP registered a modest growth rate of 2.2%, in 2003 it fell to -1.8%, and recuperated to 1.4% in 2004; in 2005, the economy was expected to grow by 1.5%. Inflation has been kept stable at around 2.5%. The unemployment rate was on the rise, growing from 4.7% in 2002, to 5.7% in 2003, and 7.2% in 2004.

INCOME

The US Central Intelligence Agency (CIA) reports that in 2005 Malta's gross domestic product (GDP) was estimated at $7.5 billion. The CIA defines GDP as the value of all final goods and services produced within a nation in a given year and computed on the basis of purchasing power parity (PPP) rather than value as measured on the basis of the rate of exchange based on current dollars. The per capita GDP was estimated at $18,800. The annual growth rate of GDP was estimated at 1.4%. The average inflation rate in 2005 was 2.8%. It was estimated that agriculture accounted for 3% of GDP, industry 23%, and services 74%.

According to the World Bank, in 2003 remittances from citizens working abroad totaled $1 million or about $3 per capita.

LABOR

Malta's workforce in 2005 was estimated at 160,000. In 2005 it was estimated that services accounted for 75% of employment, while 22% were engaged in industry and the remaining 3% in agriculture. The unemployment rate in 2005 was estimated at 7.8%.

Labor is highly organized in Malta, and about 63% of Malta's workers were unionized in 2002. As of that year there were 38 registered trade unions. The largest union, the General Worker's Union, although independent, is informally associated with the Labor Party. The General Workers' Union was integrated with the Socialist Labor Party until 1992, when this affiliation was formally ended. Although certain compulsory arbitration and mediation provisions limit the right to strike, workers still enjoy a broad right to strike including antidiscrimination provisions to protect striking workers' employment. Comprehensive collective bargaining is practiced.

The legal minimum working age is 16, and this is effectively enforced by the government. The standard workweek is 40 hours but workers in some trades can work up to 45 hours per week. Occupational safety and health standards are set by law but enforcement is uneven and accidents remain frequent. In 2002, the weekly minimum wage was $112 for adults.

AGRICULTURE

Agriculture is carried out in small fields, consisting usually of strips of soil between rocks, and is characterized to a large extent by terracing. The total area under cultivation was about 11,000 hectares (27,200 acres) in 2003. Most farms are small. Wheat, barley, and grapes are the principal crops for domestic consumption, while potatoes, onions, wine, cut flowers, seeds, and fruit are the chief export crops. The total value of agricultural crops exported in 2004 was estimated at $76 million, while agricultural imports amounted to nearly $400.3 million that year.

ANIMAL HUSBANDRY

Malta's livestock population in 2005 included 17,900 head of cattle, 73,000 pigs, 14,900 sheep, 5,400 goats, and 1,000,000 poultry. Total meat production in 2005 was 18,838 tons, half of it pork.

FISHING

Fishing is primarily for local consumption. In 2003, the total catch was 2,019 tons. Principal species included gilthead seabream, European sea bass, dolphinfish, and bluefin tuna. Exports of fish products were valued at $18.8 million in 2003.

FORESTRY

There are no forests on the islands. In 2004, $85 million in forest products were imported.

MINING

In 2004, Malta produced 6,000 cu m of salt, obtained in the desalination of sea water; 20 hard limestone quarries yielded 1.2 million cu m of limestone. The country also produced small amounts of cement, fertilizer, lime and plaster. The mining sector accounted for less than 0.5% of GDP, and the broader mineral industry economy depended mainly on trade and the storage of crude oil, refinery products, and other nonfuel mineral commodities for transshipment.

ENERGY AND POWER

Malta, with no proven reserves of oil, natural gas, nor any refining capacity, is totally dependent on imported fuel for its energy requirements.

In 2002, imports of petroleum products averaged 17,980 barrels per day, while demand came to 18,050 barrels per day. There were no imports of natural gas or coal in 2002.

Electricity is the main source of power. In 2002, thermal power stations on the main island made up Malta's total installed capacity of 0.570 million kW. Production of electrical energy that year was 1.929 billion kWh, of which 100% was generated from fossil fuels. Consumption of electricity was 1.794 billion kWh. Since 1995, the Maltese government has been exploring offshore areas for crude oil with the help of foreign companies such as Amoco, Royal Dutch Shell, and Nimir of Saudi Arabia.

INDUSTRY

Malta's principal industries are shipbuilding, maintenance and repairs, food processing, electronics, footwear, and textiles and clothing. Other products include beverages, tobacco products, lace, metals, rubber products, and plastic goods. Total industrial production amounted to 26% of GDP in 1999, the most recent year for which figures are available. The manufacturing sector grew by 17% from 1995–99. As of 2002, Malta's manufacturing sector was seen to be benefiting from the global economic downturn. Some foreign-owned companies closed operations elsewhere in the world and concentrated a degree of production in Malta, which was considered a competitive location for manufacturing activity. Manufacturing output rose 3% in 2001.

In 2003, industry made up 23% of the overall GDP, and was estimated to employ about the same percentage of the labor force; agriculture represented 3% of the GDP, while services came in first with 74%.

SCIENCE AND TECHNOLOGY

Malta's technological development has been confined largely to the shipbuilding and repair industry and the manufacture of electronic computer parts. The University of Malta has faculties of dental surgery, mechanical and electrical engineering, medicine and surgery, and science. In 1988, research and development expenditures amounted to 10,000 lira; 5 technicians and 34 scientists and engineers were engaged in research and development. The Agrarian Society founded in 1844 is headquartered in Valletta. The Chamber of Architects and Civil Engineers is headquartered in St. Andrews. In 2000 (the latest year for which data was available), Malta spent $5.382 million on research and development.

DOMESTIC TRADE

Valletta is the commercial center of Malta. Most large importers prefer to distribute goods through their own shops. Small retail establishments predominate with a few larger supermarkets and outlet stores springing up in the past few years. Billboards, newspapers, radio, and television are the main advertising media.

Shopping hours are from 9 am to 1 pm and from 3 to 7 pm. Banks are open from 8:30 am to 2 pm, Monday through Thursday, and from 8:30 am to 3:30 pm on Friday. Some bank branches are open on Saturdays from 8:30 am to 12 noon. Businesses and industries are open on weekdays from 8:30 am to 5:30 pm and on Saturdays from 8 am to 1 pm. Most establishments are closed on Sundays and many places have shorter hours during the summer months.

FOREIGN TRADE

Because it depends on external sources for much of its food, fuel, raw materials, and manufactured articles, Malta imports considerably more than it exports.

Most of Malta's commodity exports are electronic microcircuits (62%). Other export commodities include clothes (5.9%), refined petroleum products (4.4%), and toys (4.3%).

In 2004, Malta's exports totaled $2.6 billion (FOB—Free on Board), while imports grew to $3.4 billion (FOB). Its main export partners were the United States (which received 15.7% of total exports), France (15.5%), Singapore (14.5%), United Kingdom (11.2%), and Germany (10.8%). Imports included machinery and transport equipment, manufactured and semi-manufactured goods, food, drink, and tobacco, and they mainly came from Italy (25.4%), France (13.1%), United Kingdom (12%), Germany (8.9%), the United States (5.2%), and Singapore (4.1%).

BALANCE OF PAYMENTS

Traditionally, Malta has had a large trade deficit because it must import most of its food and raw materials. The expansion of industry and the improvement of living standards in recent years have further increased the deficit, which is made up by other foreign receipts in the form of tourist revenues, transfers, and financial assistance, formerly from the United Kingdom and more recently from Italy and Libya. Malta's outstanding debt stood at close to $2 billion by the end of 1999.

The US Central Intelligence Agency (CIA) reported that in 2001 the purchasing power parity of Malta's exports was $2 billion while imports totaled $2.8 billion resulting in a trade deficit of $800 million.

The International Monetary Fund (IMF) reported that in 2001 Malta had exports of goods totaling $2 billion and imports totaling $2.5 billion. The services credit totaled $1.11 billion and debit $791 million.

Exports of goods and services continued to grow in the following years, reaching $2.5 billion in 2003, and $2.7 billion in 2004. Imports followed a similar path, totaling $3.2 billion in 2003, and $3.6 billion in 2004. The resource balance was consequently negative in both years, at around -$700 million in 2003 and -$900 million in 2004. The current account balance was on a downward path, dropping to -$274 million in 2003, and -$543 million in 2004. Reserves of foreign exchange and gold reached $2.9 billion in 2004, covering more than nine months of imports.

BANKING AND SECURITIES

In June 1968, activities of the Currency Board were transferred to the new Central Bank of Malta. The Central Bank is responsible for the regulation of the banking system, the money supply, the issue of currency, and the administration of exchange control. The Central Bank manages the official external reserves and advises the Minister of Finance regarding the exchange rate of the Maltese lira. The Maltese lira is calculated on the basis of a currency basket, which currently consists of the ECU, pound sterling, and

US dollar. Foreign reserves, excluding gold, totaled $1,605 million at the end of 1995. There are four commercial banks—the Bank of Valletta, HSBC Bank Malta, Lombard Bank Malta, and APS Bank—as well as the National Savings Bank.

In November 1995, Midland Bank (United Kingdom) became the first foreign bank to be granted a license to operate in the domestic market. In 1999, Hong Kong and Shanghai Banking Corporation (HSBC) acquired 67.1% of the shares of Mid-Med. The bank was subsequently renamed HSBC Bank Malta and became the largest bank operating on the island. Six international banking institutions are established in Malta: Turkiye Garanti Bankas, First Austrian Bank Malta, First International Merchant Bank, Izola Bank, Bank of Valletta International, and HSBC Bank Malta. Total assets/liabilities of the deposit-money banks stood at lm1.88 billion in 1995, while the assets/liabilities of domestic and international banking institutions amounted to lm155 million and lm407.7 million, respectively.

The International Monetary Fund reports that in 2001, currency and demand deposits—an aggregate commonly known as M1—were equal to $1.4 billion. In that same year, M2—an aggregate equal to M1 plus savings deposits, small time deposits, and money market mutual funds—was $6.1 billion. The discount rate, the interest rate at which the central bank lends to financial institutions in the short term, was 4.25%.

Turnover at the Malta Stock Exchange dropped sharply to lm75.8 million ($70 million) in 2002, a fall of lm93.7 million compared with levels in 2001. Total market capitalization in 2002 was lm1.6 billion. In 1994 the Malta International Business Authority became the Malta Financial Services Center (MFSC), responsible for the regulation and registration of financial services provided in and from Malta.

INSURANCE

All customary types of insurance are available. Many foreign insurance companies have representatives in Malta. In 2003, the value of all direct insurance premiums written totaled $235 million, of which life insurance premiums accounted for $118 million. For that same year, Middlesea Valletta was Malta's top life insurer, with gross written life insurance premiums of $58.4 million.

PUBLIC FINANCE

The principal sources of recurrent revenues are income taxes, and customs and excise taxes. Tourism is steadily increasing as an important segment of the economy, although the 11 September terrorist attacks put a damper on it. Malta has developed a fairly high budget deficit in recent years, and fiscal policy has been dedicated to reversing the situation. Public debt grew from 24% of GDP in 1990 to 56% in 1999, but by 2000 it had been brought down to just 6.6% of GDP.

The US Central Intelligence Agency (CIA) estimated that in 2005 Malta's central government took in revenues of approximately $2.5 billion and had expenditures of $2.7 billion. Revenues minus expenditures totaled approximately -$200 million. Total external debt was $130 million.

The International Monetary Fund (IMF) reported that in 2000, the most recent year for which it had data, central government revenues were lm532.77 million and expenditures were lm623.77 million. The value of revenues was us$2,331 million and expenditures us$2,722 million, based on an exchange rate for 2000 of us$1 = lm0.22851 as reported by the IMF. Government outlays by function were as follows: general public services, 18.0%; defense, 1.6%; public order and safety, 3.9%; economic affairs, 13.9%; environmental protection, 0.3%; housing and community amenities, 2.5%; health, 11.4%; recreation, culture, and religion, 1.5%; education, 11.6%; and social protection, 35.2%.

TAXATION

In 1999, the ruling Nationalist government announced that it would raise taxes in an effort to bring the budget in line. An integral part of the new package would be measures to combat tax evasion, a phenomena that Finance Minister John Dalli characterized as a "national sport." In 1998, one of the Nationalist's first steps was the reintroduction of the value-added tax (VAT) that the previous Labor government dismantled. As of 2005, the corporate tax rate was a flat 35% and was the only tax imposed on company profits. Generally, capital gains are taxed as income for both companies and individuals. However gains received from securities listed on the Malta Stock Exchange are exempt. Dividends paid out of resident company profits that have already been taxed at the 35% rate are not taxed further at the individual level. However, dividends paid out of untaxed income to a resident are subject to a 15% withholding tax. Dividends paid out of company income that was taxed below the 35% rate are subject to a withholding tax that is the difference between the current and lower rates.

Individual incomes were taxed according to a progressive schedule with 35% as the top rate. Social security taxes totaled 19%, 10% paid by the employer and 9% by the employee. Reduced rates were available under certain circumstances on both corporate and individual income taxes. The main indirect tax was the VAT, set at a standard rate of 18%. There were also stamp taxes.

CUSTOMS AND DUTIES

Although traditionally a protectionist state, Malta's nationalist government is moving to dismantle its trade barriers in an effort to prepare for EU accession. Customs are collected mainly in the form of ad valorem duties; there are specific duties on petroleum, spirits, and tobacco. Preferential treatment is accorded to imports from the European Union. There is also a value-added tax (VAT) of 18% on all imports.

FOREIGN INVESTMENT

Malta encourages foreign investment through tax holidays, export incentives, investment and accelerated depreciation allowances, reduced taxes on reinvested profits, grants to cover training costs and management services, a generous attitude toward repatriation of profits and capital, and few restrictions on foreign ownership of Maltese firms. No data for the total value of foreign direct investment in Malta is available; the only investment figures that are kept are those collected by the government at the time of the original application for assistance by the companies. SGS Thomson Ltd. (Italy and France), first established in Malta in 1981, had an investment of $266 million in machinery as of 1995.

In 1998, foreign direct investment (FDI) inflows were $267 million, up from $80.8 million in 1997, and then soared to $822 million in 1999. FDI inflows fell to $652 million in 2000 and then to $314 million in 2001. For the period 1998 to 2000, Malta was fifth in the world in terms of success in attracting foreign investment. Malta's share of world FDI flows was 4.6 times its share of world GDP during this period.

Capital inflows totaled $555 million in 2002, and an estimated $333 million in 2003. Most investments came from Germany, the United States, France, the United Kingdom, Italy, and Austria. Foreign companies employ a significant part of the Maltese population.

ECONOMIC DEVELOPMENT

The Nationalist government's primary aim was to radically transform Malta's economy in an effort to meet EU standards in time for the next round of enlargement. The elimination of trade barriers, deficit reduction, and more efficient tax collection comprise the most significant elements of the government's EU-harmonization plan. Malta was formally invited to join the European Union in December 2002, and was finally accepted as a full member in May 2004.

Malta's economic growth has fluctuated over the past years, going into the negative in 2001 and 2003. Nonetheless, the economy is projected to grow stronger in the future as a result of higher investments in construction, and due to government efforts to meet fiscal criteria for euro qualification. Also, a slight increase in exports and private consumption are expected to help this trend.

SOCIAL DEVELOPMENT

The National Insurance Act of 1956, as amended in 1987, provides benefits for sickness, unemployment, old age, widowhood, disability, and industrial injuries. Coverage includes all residents aged 16 and over, and excludes full time students and unemployed married women. Pensions are funded by contributions from employers, employees, and the government. These benefits are supplemented by social assistance under the National Assistance Act of 1956. Legislation establishing family allowances was enacted in 1974, and maternity benefits were mandated in 1981. As of 2004, employers were required to provide 14 weeks of maternity leave with pay set at a flat weekly rate. Work injury laws have been on the books since 1929.

Women make up a growing portion of the labor force due to changing social patterns and economic necessity. However, they are often channeled into traditionally female occupations or work in family-owned businesses, and remain underrepresented at the management level. Working women generally earn less than men. Domestic violence against women remains a problem but is addressed by the government through specialized police units, legal assistance, shelters, and legislation. These efforts paid off with a decrease in domestic violence in 2004. Women have equality in matters of family law, although divorce is not legal.

The law mandates protection of all groups against economic, social, and political discrimination. The government is committed to protecting human rights, and human rights organizations are free to operate in Malta.

HEALTH

Free health services are administered by the government run polyclinics. British, Belgian, and other foreign medical personnel work in Malta's hospitals. Infant mortality decreased from 23.3 per 1,000 live births in 1973 to an estimated 3.89 in 2005. Average life expectancy at birth was 78.86 years. As of 2004, there was an estimated 293 physicians, 377 nurses, 40 dentists, and 192 pharmacists per 100,000 people. The HIV/AIDS prevalence was 0.20 per 100 adults in 2003. As of 2004, there were approximately 500 people living with HIV/AIDS in the country. There were an estimated 100 deaths from AIDS in 2003.

HOUSING

Malta has the somewhat unusual situation of having a large surplus of housing stock. In 1995, about 23% of the housing stock was vacant, translating into about 35,723 dwellings. About 36% of vacant homes are considered to be second homes in private ownership. In 2003, an estimated 52,000 homes were vacant. Despite the surplus, the government continues to issue an overabundance of housing construction permits. For the period of 1994–2001, the Planning Authority issued about 3,000 permissions for housing development per year. The average increase in households was only about 1,700 per year for the same period.

Many new homes are being built in rural or suburb areas, a move which has been somewhat detrimental to urban areas since residents leaving the cities are often simply abandoning their urban properties. Some of these properties have fallen into disrepair, but many are still considered to be in adequate and good condition. Residential property is seen as a good investment for those who can afford to own their own homes and about 70% of all homes are owner occupied. Unfortunately, those who own a second home are often not willing to offer the property for affordable rental. Which also means that those who cannot afford to own their own home often find it difficult to find an affordable place to rent. The government provides some rental properties for low-income families and have made plans to encourage property owners to open their properties for rental.

EDUCATION

Maltese law requires that the teachings of the Roman Catholic Church be included in the public school curriculum, and legislation passed in 1983 requires all schools to provide free education. Education is compulsory for 11 years for children between the ages of 5 and 16 and is free in public schools. Primary school covers six years of study, followed by five years of junior lyceum (lower secondary). Students then have an option of attending a two-year high school or a four-year vocational school. Private independent and church secondary schools may have more specialized curriculums. The academic year runs from October to June.

Most children between the ages of three and four are enrolled in some type of preschool program. Primary school enrollment in 2003 was estimated at about 96% of eligible students. The same year, secondary school enrollment was about 87% of eligible students. It is estimated that nearly all students complete their primary education. The student-to-teacher ratio for primary school was at about 19:1 in 2003; the ratio for secondary school was about 10:1. In 2003, private schools accounted for about 36.5% of primary school enrollment and 27.3% of secondary enrollment.

Institutes of higher education include the University of Malta, the International Maritime Law Institute, and the School of Art. In 2003, about 30% of the tertiary age population were enrolled in some type of higher education program. The adult literacy rate for 2004 was estimated at about 87.9%, with 86.4% for men and 89.2% for women.

As of 2003, public expenditure on education was estimated at 4.6% of GDP.

LIBRARIES AND MUSEUMS

The National Library of Malta (founded in 1555) is located in Valetta and held 380,000 volumes in 2002. The National Archives is housed in Rabat. The University of Malta Library (1769) is in Msida and contains over 700,000 volumes. The Malta Public Libraries consist of the main Central Public Library at Floriana, 7 regional libraries and 38 branch libraries. There is also a Gozo Public Library. There are over 50 school libraries throughout Malta.

Valletta is the site of the National Museum of Archaeology, the National Museum of Fine Arts, the Palace Armory, the National War Museum, and the St. John's Museum. The Folk Museum and the Museum of Political History are at Vittoriosa, where the Malta Maritime Museum also opened in 1992. There is an archeological museum located in a Copper Age temple in Mgarr and a museum of Zomon antiquities in Rabat.

MEDIA

In 2003, there were 208,300 mainline phones and 290,000 mobile phone in use nationwide.

Malta's government radio service transmits on two channels (one Maltese, one English). The Labor Party and the Nationalist Party both own one radio and one television station. The Catholic Church also sponsors a radio station. There are other private stations as well. Television programs are received primarily from a local service and from Italy. As of 2001 there were 1 AM and 18 FM radio stations and 6 television stations, plus 1 commercial cable network. In 1997, there were 255,000 radios and 280,000 television sets throughout the country. In 2002, there were 120,000 Internet users.

The press includes daily and Sunday newspapers, published in both Maltese and English. Leading papers (with estimated 2002 circulations) are It-Torca (Maltese, 30,000 daily), L'Orizzont (Maltese, 25,000 weekly), the Times (English, 23,000 daily), Il-Mument (Maltese, 25,000 weekly), and In-Nazzion Taghna (Maltese, 20,000 daily).

The constitution provides for freedom of speech and press, and the government is said to respect these rights in practice.

ORGANIZATIONS

The Chamber of Commerce is located in Valletta. There are several professional and trade organizations representing a variety of occupations. The largest independent private business organization is the General Retailers and Traders' Union–Malta. The Malta Federation of Industry also has some influence. The Medical Association of Malta represents the interests of doctors and patients. Other professional unions and associations are active on a national level.

The Malta Cultural Institute promotes primarily the arts of music and dance. Sports associations include organizations for such sports as cricket, football (soccer), weightlifting, and badminton. National youth organizations include the Malta Youth Labor Brigade, Nationalist Party Youth Movement, Scout Association of Malta, Student Democrats of Malta, University Student Council of Malta, University Students' Catholic Movement, and the Young Christians. The National Council of Woman of Malta encourages equal opportunity for women in business and education.

Multinational organizations based in Malta include the International Ocean Institute and Greenpeace Mediterranean. There is a national chapter of the Red Cross Society.

TOURISM, TRAVEL, AND RECREATION

Tourism, a major industry, has played a large role in developing the Maltese economy since the 1990s. Malta has many scenic and historical attractions, especially in Valletta, plus excellent beaches. Football (soccer) is the national sport; hockey, badminton, darts and rugby are also popular as well as billiards and snooker.

US citizens and most Western Europeans do not require a visa for stays of up to 90 days. In 2003, about 1,127,000 visitors arrived in Malta, of whom 40% came from the United Kingdom. That year there were 41,365 beds available in hotels and other accommodations with a 53% occupancy rate.

In 2005, the US Department of State estimated the daily cost of staying in Malta at $209.

FAMOUS MALTESE

The city of Valletta derives its nomenclature from Jehan Parisot de la Vallette (1494–1568), Grand Master of the Knights of St. John, who successfully withstood a great Turkish siege in 1565. Dominic (Dom) Mintoff (b.1916), a founder of Malta's Labour Party, was prime minister during 1955–58 and 1971–84. Agatha Barbara (1923–2002), a former cabinet minister, was elected the first woman president of Malta on 16 February 1982. Edward Fenech-Adami (b.1934), who served as prime minister from 1987–96 and from 1998–2004, became president in 2004.

DEPENDENCIES

Malta has no territories or colonies.

BIBLIOGRAPHY

Balbi, Francesco. Trans. by Ernle Bradford. The Siege of Malta, 1565. Rochester, N.Y.: Boydell Press, 2005.

Berg, Warren G. Historical Dictionary of Malta. Lanham, Jd.: Scarecrow, 1995.

Five Small Open Economics. New York: Oxford University Press, 1993.

Gregory, Desmond. Malta, Britain, and the European Powers. Madison: Fairleigh Dickinson University Press, 1996.

Holland, James. Fortress Malta: An Island under Siege, 1940–1943. New York: Miramax Books/Hyperion, 2003.

Spooner, Tony. Supreme Gallantry: Malta's Role in the Allied Victory, 1939–1945. London: J. Murray, 1996.

Terterov, Marat (ed.). Doing Business with Malta. Sterling, Va.: Kogan Page, 2003.