Malta government faces make or break budget vote

VALLETTA (Reuters)- - The Maltese government faces a crucial budget vote in parliament on Monday, with one of its MPs saying he will vote with the opposition, potentially bringing forward an election due early next year.

The ruling Nationalist Party of Prime Minister Lawrence Gonzi has a one-seat majority in the 69-member parliament, and it trails the opposition Labour party by nine points in the opinion polls, according to a newspaper survey.

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

Debono has demanded Gatt's resignation as a way out of the crisis, but Gatt has ignored his calls.

Gonzi has said he will ask President George Abela to dissolve parliament and call an election if the budget is defeated.

"Losing the Budget vote will not be the end of the world. The legislature is coming to the end of its term and elections will be held early next year," Gonzi told a political event on Sunday.

The Nationalist Party government was elected by a slim majority in 2008.

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.

Maltese media has speculated that the election will be held on March 9 if the Budget is defeated.

The Opposition Labour Party's leader, Joseph Muscat, has said that a Labour government will retain the budget measures - including a reduction of the top rate of income tax to 32 percent - to ensure economic instability.

(cscicluna@timesofmalta.com; Editing by Louise Heavens)