Budget 2026: Deficit to fall below 3%

The finance minister expects Malta to maintain its economic growth momentum at current levels next year, enabling the deficit to slip below 3% of GDP.

Clyde Caruana told parliament during the delivery of Budget 2026 that Malta is projected to have GDP growth of 4.1% in real terms, which is three times higher than projections for the EU.

Domestic demand is expected to fuel economic growth along with public investments as projects mature, as well as exports of digital services and tourism.

Labour sector growth is expected to stabilise, as will inflation, at 2.2%.

Caruana said that the national debt is projected to be stable at 47.1% of GDP, falling further over the next few years, having been around 70% of GDP in 2012. The deficit, which was projected to fall to 3.5% of GDP this year, will actually drop to 3.3% and fall further to 2.8% next year.

This, Caruana said, was happening despite generous tax cuts announced last year and new fiscal measures for parents announced with this budget as well as other allowances and assistance schemes such as subsidies on electricity.

'A sustainable budget'

Asked by journalists at a briefing how the government would fund its various new tax cuts, he said the government was careful to ensure that Malta had a sustainable budget.

While it was not introducing new taxes, it was managing to improve its revenue and cut the deficit by ensuring that everyone paid their due, as well as by growing the economy, and being careful in its spending.

“Our fundamentals are strong,” he insisted.