Government debt hits 'all-time record' high of €11.16 billion

Central government debt stood at €11.16 billion at the end of July 2025, up €1.39 billion from the same month last year, with a €60 million surplus turning into a €518 million deficit.

The latest data issued by the National Statistics Office on Friday reveal that the Consolidated Fund closed July with a deficit of €518 million. Between January and July, recurrent revenue rose by €13.7 million to €4,103.2 million compared with 2024. But spending increased even faster, climbing by €592 million to €4,621.1 million. This left the Fund €578.3 million worse off overall.

Recurrent expenditure reached €4,009.3 million, up €472.3 million from €3,537.0 million a year earlier. The biggest revenue gain came from Social Security, which added €98.4 million. On the expenditure side, the sharpest increase was in Programmes and Initiatives, which grew by €218.1 million.

Other notable rises included Personal Emoluments (€117.0 million), Contributions to Government Entities (€95.4 million) and Operational and Maintenance Expenses (€41.8 million). Within Programmes and Initiatives, higher spending went mainly towards Social Security benefits (€91.9 million), Church schools (€21.7 million) and energy support measures (€16.5 million).

The gap between revenue and expenditure resulted in a €518.0 million deficit by the end of July 2025, a sharp reversal from the €60.3 million surplus recorded a year earlier.

Central government debt at the end of July reached €11,162.4 million, up €1,392.7 million from July 2024. The increase was driven mainly by Malta Government Stocks, which rose by €1,291.4 million. Treasury Bills (€81.7 million), Foreign Loans (€77.7 million) and Euro coins issued in the name of the Treasury (€3.8 million) also added to the debt.

This rise was partly offset by a €38.5 million drop in the 62+ Malta Government Savings Bond. In addition, higher holdings of Malta Government Stocks by government funds reduced the debt by a further €23.5 million.

‘Deeply worrying’ - PN

Reacting to the news, the Nationalist Party said the “all-time record” debt is “deeply worrying” warning it would tarnish Malta’s investment potential.

“Out-of-control debt raises doubts in the eyes of investors. Malta has never carried such a debt burden,” the PN said.

The Opposition claimed that prime minister Robert Abela has “accumulated as much debt as all his predecessors combined”.

They referred to a Central Bank report analysing government expenditure which highlighted that spending had increased by 14.3 per cent last year, ore than double the European Commission’s recommended average of 5.9 per cent.

The bank further said that even if one were to exlude one-off capital costs such as those linked to the closure of Air Malta and the launch of KM Malta Airlines, government expenditure still exceeded 10% – far above the EU-recommended and agreed thresholds. The same report also states that, looking ahead, no improvement is being forecast for 2025.

The PN added that this increase in spending occurred despite no progress being made to tackle Malta’s most pressing problems, including the rising cost of living, infrastructure shortcomings, sea pollution and hospital delays.

The PN statement was signed by Graham Bencini, shadow minister for Finance, and Jerome Caruana Cilia, shadow minister for the economy and enterprise.