FRANKFURT (MNI) – Efforts to cut deficits and debt levels will
restrain growth rates in many economies, European Central Bank Governing
Council member Michael Bonello said Thursday.
Both demand and supply factors explain recent weak lending in the
Eurozone, the head of Malta’s Central Bank said in the text of a speech
provided by his bank.
Economic activity in both the Eurozone and the United Kingdom,
Malta’s largest trading partners, fell by 4.1% and 4.9% respectively in
2009. Lower tax revenues and higher public outlays “took their toll on
public finances,” Bonello observed, “with deficits in a number of
countries rising close to, or even exceeding, double digit levels.”
“The growth rate of these economies over the coming years will be
constrained by the inevitable fiscal consolidation required to bring
deficit and debt ratios back to sustainable levels,” he said.
In addressing credit flows to small and medium-sized enterprises,
Bonello noted that a recently published ECB survey, not including the
five smallest countries in the EMU (of which Malta is one), showed that
SMEs were generally less successful in obtaining bank loans than large
companies last year.
“In the second half of 2009, 75% of all SMEs reported successful
approaches, slightly less than in the first half of the year. The main
reasons given by the banks were the general economic and the
firm-specific outlook, together with a reduced willingness to extend
credit,” Bonello explained.
“It would appear, therefore, that both demand and supply factors
explain recent credit developments in the euro area,” he concluded.
–Frankfurt bureau; +49-69-720142; frankfurt@marketnews.com
[TOPICS: MGX$$$,MT$$$$,M$$CR$,M$X$$$,M$G$$$,M$F$$$,M$$EC$]
