The European Central Bank has lavished praise on the Eurozone's newest member...

According to the ECB, Malta was the Eurozone’s best performer in terms of price stability over the one-year period between April 2007 and March 2008, with a harmonised index of consumer prices (HICP) inflation rate of 1.5 per cent.

Malta saw the Eurozone’s lowest rate of inflation over the period, followed closely by the Netherlands with a rate of 1.7 per cent and Denmark’s two per cent. The country was, in fact, used as a price stability benchmark by the ECB and the European Commission as they deliberated on the Eurozone eligibility of 10 member states, for which only Slovakia made the grade.

For the price stability criterion, the three best performing Eurozone countries in terms of price stability are averaged and an additional 1.5 per cent is added on to the average – culminating in a reference value of 3.2 per cent.

Turning the tables

The situation represents a significant turning of the tables for Malta, which this time last year had hoped to meet the reference value so as to gain entry into the Eurozone, and this year being placed as the Eurozone’s best performer and used for the very same benchmark.

The achievement of the Eurozone’s best price stability performance is even more salient for Malta considering that the April 2007-March 2008 timeframe encompasses the country’s euro changeover period and accompanying inflationary concerns.

Malta was also used as a yardstick for long-term interest rates over the same one-year period. The reference value for long-term interest rates was set at 6.5 per cent and was reached by averaging the long-term interest rates of the three best performers in price stability, and adding an additional two per cent to the average.

Of the three, Malta had the highest long-term rate at 4.8 per cent, compared with the 4.3 per cent rate registered by both Holland and Denmark.