Bloomberg News

Malta’s Gonzi Faces Confidence Vote That May Derail Deficit Cuts

January 26, 2012

(For more on the euro crisis, go to EXT4)

Jan. 26 (Bloomberg) -- Maltese Prime Minister Lawrence Gonzi faces a no-confidence vote in parliament that could bring down the government and undermine his efforts to trim the deficit and shield the country from fallout from the debt crisis.

Gonzi, who holds a one-seat majority in the parliament, told the legislature in Valletta today before the noon vote that early elections would increase the risk to Malta’s economy.

The motion was presented by Joseph Muscat, leader of the opposition Labour Party, after Franco Debono,a member of Gonzi’s ruling coalition, threatened to withdraw his support for the government. The 38-year-old lawmaker has criticized Gonzi for failing to implement constitutional reforms, including an overhaul of party financing rules, and has called for Gonzi’s resignation.

Debono may abstain in the vote, granting Gonzi’s government a lifeline, newspapers including the Times of Malta have reported.

Earlier this month, Gonzi said the government will impose as much as 40 million euros ($51 million) in cuts to its 2012 budget as it bows to pressure from the European Commission to do more to meet its goal of reducing the deficit to 2.8 percent of gross domestic product this year. The cuts may reach as much as 0.6 percent of GDP.

--Editors: Andrew Davis, Patrick Henry

To contact the reporter on this story: Karl Stagno Navarra at ksnavarra@bloomberg.net

To contact the editor responsible for this story: Andrew Davis in Rome at abdavis@bloomberg.net


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