BusinessToday Previous Editions

2 NEWS 19.5.2022 THE Central Bank of Malta has pub- lished the second issue of its Quarter- ly Review for 2022. It analyses in depth economic and financial developments in Malta and abroad during the fourth quarter of 2021. In the fourth quarter of 2021, econom- ic activity continued to recover from the impact of the COVID-19 pandemic. Growth remained robust, as real GDP rose by 10.0% in year-on-year terms. By the end of the year, GDP was slightly above the level that prevailed before the pandemic. Potential output growth stood at 4.3% in the fourth quarter of 2021, up from 3.8% in the previous quarter. e Bank's estimate of the output gap, while still negative, narrowed, indicating that although the economy's productive capacity remains somewhat underuti- lised, activity is gradually normalising. e Bank's Business Conditions In- dex stood above its historical level, reflecting strong increases in several sub-components of the index over the fourth quarter of 2020, when most eco- nomic variables were subdued due to the COVID-19 pandemic. e European Commission's Econom- ic Sentiment Indicator edged down from the level recorded in the third quarter but remained above its long- term average and its pre-pandemic lev- el. is may reflect the slightly lower level of COVID-19 restrictions com- pared to 2020 as well as a further in- crease in vaccination rates achieved in the second half of the year. Developments in the labour mar- ket remained positive. Employment remained above pre-pandemic levels while activity rates rose further. e un- employment rate continued to decline, falling to 3.2% from 3.6% in the previous quarter, and well below the 4.4% record- ed a year earlier. Malta's unemployment rate also stood well below the average rate of 7.4% for the euro area. Inflation, picked up during the quarter under review. e annual rate of change of the Harmonised Index of Consumer Prices stood at 2.6% in December, well above the 0.7% observed in September. All components except energy pric- es registered faster growth, although services inflation was the main driver behind the increase in inflation. An- nual inflation based on the Retail Price Index – which only takes into account expenditure by Maltese residents – rose to 2.6% in December from 2.2% in Sep- tember. During the fourth quarter of 2021, the general government deficit widened when compared to that recorded in the corresponding period of 2020. When measured on a four-quarter moving sum basis, the general government defi- cit reached 8.0% of GDP in 2021, some- what lower than the 9.5% recorded in 2020. Meanwhile, the general government debt-to-GDP ratio rose to 57.0% from 53.4% at end- 2020. Government's net financial worth as a share of GDP deteriorated in the quarter under review. e Review also presents an overview of the monetary policy decisions taken by the Governing Council of the Eu- ropean Central Bank. e Governing Council maintained an accommoda- tive monetary policy stance during the fourth quarter of 2021. Key ECB policy rates remained unchanged at low levels. In December, the Governing Council stated that the progress in econom- ic recovery and in reaching its medi- um-term inflation objective permitted a gradual reduction in the pace of its as- set purchase over the coming quarters. In fact, the Pandemic Emergency Pur- chase Programme ended in March 2022 and the pace of net purchases under the Asset Purchase Programme (APP) for the second quarter of this year was scaled down. At the same time, the Council stated that conditional on the inflation out- look, net purchases under the APP could end in the third quarter of 2022, and that any increases to interest rates would take place sometime after the end of net purchases under this pro- gramme and would be gradual. e Review presents a study which outlines the measures applied by the Maltese government in response to the COVID-19 pandemic and their impact on public finances. It also carries an analysis of the evolution of labour mar- ket policy in Malta. e Review also presents a study of the Maltese governance framework using two different data sources. In addition, it reviews the results of the European Investment Bank Survey on Investment and Investment Finance for Malta. Central Bank of Malta publishes second issue of its Quarterly Review for 2022 2022 Vol. 55 No. 2 QUARTERLY REVIEW BANK of Valletta has confirmed its annual general meeting will be held virtually, as previously announced, but a physical meeting for sharehold- ers in the presence of the board of di- rectors and the executive committee will also be held. The bank came under heavy criti- cism in the past two weeks after it in- sisted on holding a virtual AGM even after it announced it had reached a settlement of €182.5 million to settle a massive, €363 million claim by bond- holders of a defunct, Italian shipping company from a town in the south of Italy. The bank was appealing the forfei- ture of a €363 million precautionary security last December, when it en- gaged with the curators of the bank- ruptcy of the Deiulemar group, to explore the possibility of a mutually satisfactory resolution to the dispute out of court. When the settlement was an- nounced, there were public calls for BOV to hold its AGM, scheduled for 2 June, in person, so that sharehold- ers could question the directors and the executive committee, but the bank insisted it was too late to change its plans for the meeting. In a company announcement issued on Monday the bank said a physi- cal meeting will be on 15 June to give shareholders the opportunity to obtain a clear picture of the bank's business. "In this question and answer ses- sion, BOV shareholders can field questions regarding recent develop- ments concerning the Bank's business, including the latest developments leading to the out-of-court settlement in the 'Deiulemar' case," the statement read. The bank said shareholders who want to attend the information ses- sion can register their intent by send- ing an email to iro@bov.com by not later than Friday 10 June. AGM to be held as planned BOV confirmed the AGM will still be held as planned in a virtual format on 2 June 2022. "The organisation of an AGM for an institution of the size of Bank of Valletta, which is the largest locally quoted company with approximately 20,000 shareholders, requires several months of preparation and activities which, once committed to, cannot be reversed," it said in its statement. "This involves not only the selec- tion of a venue that is suited to the occasion, but also the prepa- ration, printing and posting of of- ficial documentation including the Proxy Form, Notices and Circulars to Shareholders in line with the statutory requirements and timings established for such an event." BOV shareholders' meeting on Deiulemar two weeks after AGM

• Cover