Nationalist leader Bernard Grech said on Sunday difficult decisions have to be taken if the party is to survive.
Addressing the party general council at the PN headquarters, Grech said the party could not afford to become further fragmented.
The party's debts, he said, had reached €32 million and the party media company, which is losing tens of thousands of euros each month, is unsustainable.
The PN leader said it would be futile to bury one's head in the sand and to hide the challenges the party is facing from members.
Leadership 'not the problem'
The party's problems, he said, transcended its leadership. Four leadership changes had led to similar results at the polls, confirming that leadership is not the problem.
"We must rid ourselves of the fear of our realities," Grech told councillors, saying he is duty-bound to present to them a true picture of the party's current state.
He said that in spite of all the problems, "there is hope" as the party had assets which can help it get back on its feet.
But it is only when the financial situation is back in order that the party can shift its focus to politics.
The PN leader said the electorate will only trust the party to run the country again once it manages its own financial situation well.
Tough decisions ahead
Grech called upon those present to once again trust him to take the necessary decisions in the interest of the party and the country.
"I am prepared to discuss, but I must also decide," he said.
He pledged to put his leadership to the test again if the PN fails to manage to secure the third seat in the upcoming MEP elections.
Grech also had strong words for "those who are unable to put their disappointments aside" in the interest of the party.
"No one is bigger than the party. We need to learn to keep our suffering inside and put the party first," he said.
He said this is a very delicate time for the party and called upon members to be bold and not let anyone break up the PN.
Leadership election
Grech was speaking at the PN general council which was convened almost a month after the March 26 general election, triggering the process for the election of a party leader.
The process was initiated by the executive branch of the party, which earlier this month called for a meeting of the party councillors as stipulated by the statute.
Party rules require an election for a party leader following an electoral defeat.
General council president Mark Anthony Sammut explained the process briefly saying that if there is only one candidate by the time the nominations come to a close, the vote will be in the hands of council members.
If there are two candidates, party members will be asked to vote for the leader.
Should more than two candidates be interested in running for the leadership, the general council members will be asked to vote, with the two candidates obtaining the most votes then going head to head for a fresh vote by party members.
PN electoral commission president Peter Fenech said the party's electoral commission will set the ball rolling by calling for nominations.
In fact, shortly after the conclusion of Sunday's council, the PN issued a statement calling for such nominations to be presented by April 30.
Fenech said all candidates will be scrutinised by the party's candidates' commission within six weeks.