Ritratt: CanvaFinance minister Clyde Caruana confirmed on Monday that the government is expecting to report a deficit of around €820 million this year, representing 3.3% of the country’s GDP – slightly lower than the 3.5% projected in last year’s budget.
In raw terms, the projected deficit is actually slightly higher than the €814.2 million reported last year, but this increase was offset by the country’s economic growth – projected to be around 4.1% in real terms this year – to bring the country’s deficit-to-GDP ratio slightly down from last year’s 3.5%.
Caruana’s financial estimates indicate that the government expects to reduce both the deficit and the deficit-to-GDP ratio next year.
Malta still on track to end excessive deficits in 2026
The projected 2026 deficit will be €751 million, while the projected deficit-to-GDP ratio – which assumes that Malta’s GDP continues to grow at roughly the same level – is 2.8%. The 2026 projections have been left practically untouched from last year.
Consequently, Malta expects to bring its excessive deficits as defined by the EU – whose treaties establish a 3% deficit-to-GDP ratio – next year, as had already been projected in last year’s budget.
The financial estimates project that Malta’s deficit will be reduced to €685 million (or 2.4% of the GDP) in 2027, and reduced to €615 million (or 2.0% of the GDP) in 2028.
Debt will keep growing, but debt-to-GDP ratio expected to stabilise
Present and future deficits, naturally, will see Malta’s government debt – which surpassed the €10 billion mark for the first time last year – continue to increase. It is expected to surpass €11.6 billion by the end of the year, reach €12.5b in 2026, €13.3b in 2027 and surpass the €14b mark in 2028.
On his part, Caruana has long emphasised that these numbers are secondary in importance to the debt-to-GDP ratio: the EU treaties set a ceiling of 60% of the GDP, though many member states presently surpass it.
Malta is not among them, however, and Caruana’s financial estimates project that the debt-to-GDP ratio will change only slightly over the next few years, and actually plateau next year.
The ratio is presently rising, from 46.17% last year to a projected 47.12% at the end of this year and 47.32% at the end of 2026. But Caruana’s estimates expect the ratio to fall to 47.06% in 2027 and 46.4% in 2028.
Caruana hails years of ‘responsible budgets’
In his budget speech, Caruana insisted that the government he forms part of had always presented “responsible budgets,” and while the deficit increased dramatically following the Covid-19 pandemic – peaking at 8.7% of the GDP in 2020 – it had already been brought under control.
He said that the country had strong economic foundations, which made it possible to “present the people with another budget that continues to address the challenges they face.”
