VALLETTA (Reuters) - Malta goes to the polls on Saturday in snap elections that Prime Minister Joseph Muscat called as a vote of confidence to counter allegations of corruption.
Opinion polls have pointed to a victory by Muscat's Labour party but with a far narrower margin than in 2013, when Labour won by a landslide after 15 years in opposition.
The Mediterranean island nation with a population of 400,000, the European Union's smallest state and holder of its rotating presidency, is enjoying the effects of one of the bloc’s best performing economies.
When Muscat, whose five-year term was to have ended next year, called the snap elections a month ago, he said they were vital in order to contest the corruption allegations he said risked creating uncertainty that could hurt the economy.
Muscat says his government has given Malta what he calls "the best times ever," with GDP averaging growth of six per cent in real terms, unemployment at a record low of about 4 per cent, more job creation and rising wages and pensions.
"My duty is not just to protect myself but also to safeguard my country, and I will not tolerate a situation where jobs are lost because of uncertainty. We cannot allow uncertainty to slow the rhythm of Malta’s economic miracle," Muscat said when he called the elections on May 1.
Before that, the opposition Nationalist Party had demanded that the 43-year-old Muscat step down over allegations of improper business dealings by his wife and some of his associates.
Daphne Caruana Galizia, 52, a widely followed blogger who first made the corruption allegations, has said documents in a small Malta-based bank showed that Michelle Muscat was the beneficial owner of a company in Panama and that large sums of money had been moved between the company and bank accounts in Azerbaijan.
The Nationalist Party has also produced documents which it claims show that Muscat’s chief of staff, Keith Schembri, received kickbacks from the sale of passports under a controversial Citizenship by Investment scheme.
Opposition leader Simon Busuttil, 48, has also accused government minister Konrad Mizzi of receiving kickbacks from a power station project.
Muscat, Schembri and Mizzi have all denied the claims and have begun legal action against the accusers. Magistrates are investigating the allegations. Muscat has described the claims against his wife as the "mother of all lies".
Last year, documents leaked in the so-called Panama Papers, which revealed holdings by foreigners in offshore companies, showed that Schembri and Mizzi owned companies in Panama. Both have denied any wrongdoing.
Busuttil, who is leading his Nationalist party into a vote for the first time, said the election is about principles.
"It is not enough that the economy is doing well. Money is not everything, our values, our principles come first. Honesty and integrity come first. We are not for sale,” he told an opposition rally last Sunday.
The Nationalists have allied themselves with the small Democratic Party, formed by two former Labour MPs.
Writing by Chris Scicluna and Philip Pullella; Editing by Stephen Powell