Malta calls March election after budget defeat

Reuters News
Posted: Dec 10, 2012 5:05 PM
Malta calls March election after budget defeat

VALLETTA (Reuters)- - Malta called an early election on Monday after its centre-right government failed to get its 2013 budget through parliament by one vote.

Prime Minister Lawrence Gonzi told journalists the Maltese parliament would be dissolved on January 7 and a new election held on March 9.

The budget was defeated after Franco Debono, a member of the ruling Nationalist Party, voted against it, robbing the government of its one-seat majority.

Debono has been an increasingly fierce critic of the government, particularly transport minister Austin Gatt, over decisions to hand the running of the island's bus system to Germany's Arriva and the use of heavy fuel oil at a new power station instead of gas.

Malta, the smallest of the 17 countries that use the euro, has largely sidestepped the troubles of its larger neighbors and its economy grew by 1.9 percent in real terms in the third quarter of this year.

The Nationalists, elected by a slim majority in 2008, are trailing the opposition Labour Party by about nine points, according to opinion polls published by a Maltese newspaper on Sunday.

Without the budget defeat, they could have held out without an election until August.

Labour leader Joseph Muscat has said he would retain the budget measures - including a reduction of the top rate of income tax to 32 percent - to ensure economic instability.

(Editing by Andrew Heavens)