Debt, deficit lower than projected as Clyde Caruana hails strong finances

The country’s debt and deficit have gone lower than initially projected, Clyde Caruana said on Tuesday.

The finance minister said that Malta's debt remains a third lower than the EU average, and people’s standard of living is around 10 per cent higher than that of their European neighbours. 

Caruana said Malta's debt-to-GDP ratio for 2024 stands at 47.4%, significantly lower than the 55.3% he had forecast in his budget speech for that year.

Similarly, the country’s deficit has also seen a positive revision, settling at -3.7% of GDP, an improvement of 0.8% compared to the projected -4.5%.

He was speaking at a press conference following the publication of deficit and debt figures by the National Statistics Office (NSO) and Eurostat.

"The debt and deficit are under control and we exceeded the efforts required of us by the EU," he said. 

“Despite the pandemic and the fact that we are still the only EU country subsidising energy, debt is going down. This demonstrates our ability to safeguard the economy without jeopardising the nation's finances, all while adhering to EU regulations."

He boasted about the sustainability of Malta’s fiscal situation, saying that the decreasing debt year-on-year provides a buffer against future economic shocks. 

"We are not only keeping debt below the 60% threshold mandated by the EU, but we are also consistently reducing it. This resilience will allow us to absorb potential future challenges, such as pandemics or energy price spikes, as we did in the past by supporting businesses and families – a strategy that has proven successful,” he said.

NSO figures published on Tuesday.

In figures published Tuesday, the NSO said that in 2024, the government recorded a deficit of €825.3 million, which translates to 3.7% of the nation's GDP. This figure represents the difference between the government's total revenue and its total expenditure for the year.

Simultaneously, the national debt saw an increase of €817.7 million compared to the previous year. By the end of 2024, the total government debt stood at €10,648.4 million, equivalent to 47.4% of GDP. This indicates the total amount of outstanding financial obligations of the government.

‘2025 will be better as well’

Caruana said even the figures for this year will be more positive than expected.

"In last October’s budget I projected a deficit of 3.5% for this year. Today, I am pleased to announce we are revising that target to 3.3%. This should dispel any notions of weakening government finances, and in saying this, I’m demonstrating our confidence in achieving that target."

This positive outlook, according to the Minister, will enable the government to continue implementing its electoral manifesto commitments, sustain existing tax cuts, and maintain energy bill subsidies. 

He further projected that Malta would comfortably be under the 3% deficit mark by next year without withdrawing any financial assistance from people, a feat he said was unique within the European Union.

He attributed the positive fiscal trajectory to growing government revenue and a healthier economic growth rate compared to the EU average.

'Debt 30% lower than EU average'

Comparing Malta's financial standing with the rest of the bloc, Minister Caruana pointed out that the country's debt level is at least 30% lower than the EU average.

And the purchasing power of the Maltese people has surpassed the EU average by approximately 10% between 2019 and last year, he added.

"The country's finances are more than on track," he concluded. 

"We anticipate a continued decrease in the deficit without imposing any additional burdens or taxes on the people. This will allow us to exit the excessive deficit procedure without placing any undue pressure on people and businesses.”