The European Commission is set to unveil its budget proposals for the 27-member bloc today, with sources indicating that Brussels will propose Malta contributes more to the EU budget than it receives.

“I expect the Commission will look at the strong economic performance and decide it’s time for Malta to start contributing to the budget after 21 years of membership,” one EU insider said.

Others were more cautious, saying that even after today’s proposals are announced “the picture won’t be entirely clear because the budget is spread across so many programmes”.

Known officially as the Multiannual Financial Framework, it will be negotiated over the next year and a half between the Commission, national governments and the European Parliament. The seven-year budget is expected to total approximately €1.2 to €1.3 trillion.

Last time the EU concluded its Multiannual Financial Framework in 2020, Malta managed to get its best-ever package, securing €2.25 billion in funds from the European Union.

At the time, Malta was initially proposed to be a net contributor to the EU but ultimately received €1 billion more than it contributed. That package will expire in 2027.

What to expect

The European Commission will on Wednesday propose its first draft of its seven-year budget. It will suggest how much money is allocated to which programmes, such as Erasmus and agriculture funds. It will also propose how cohesion funds, which are spread across national governments, are divided.

From that point, the 27 commissioners – each responsible for a portfolio similar to a government ministry – will begin discussing the financial packages relevant to the ministers of each EU member state.

“For example, the commissioner responsible for education will discuss the Erasmus budget with the education ministers of the 27 countries, and the agriculture commissioner will do the same with the agriculture ministers,” one Commission official explained.

“The leaders of each EU country will also be negotiating on a more general level about who gets what and how much.”

The European Parliament will also be discussing those plans across its committees that correspond to the commission portfolios.

Since the parliament has the power to reject the budget, it holds significant influence over what is included or excluded from the seven-year financial framework.

Preliminary discussions have already begun, with the Commission already getting an idea of what the member states and parliament would like to see in the budget.

Malta’s EU Funds Minister Stefan Zrinzo Azzopardi was in Brussels this week to discuss the budget proposals with at least two commissioners: Roxana Mînzatu (social rights, skills, and quality jobs) and Raffaele Fitto (cohesion and reforms).

In general, funds are distributed based on a country’s GDP and Gross National Income per capita.

As a rule of thumb, countries with stronger economic metrics tend to contribute more to the EU budget and receive less in return.

Sources said that, besides Malta having a relatively strong economy, it could also face cuts because the EU may divert funds to defence and aid to Ukraine.

The EU will also have to start paying back the loans it took out for the COVID recovery fund which could mean less funding overall.

However, some government sources were optimistic, saying that despite most member states expecting smaller envelopes this time around, the Maltese government can still garner a substantial amount of EU cohesion and agricultural funding for Malta.

The Commission will need to either cut the EU funds budget across the board or identify new sources of income to finance those and other programmes.

Discussions in EU circles are already focused on the Commission’s proposal for a new tax on large corporations that have a turnover of over €50 million – that would directly go to EU coffers. However, unanimity among the member states is required for such a proposal to be approved.