Government debt servicing costs ‘a serious concern’ - Momentum

Momentum has called for a “comprehensive strategy” to manage Malta’s existing debt, raising “serious concerns” about the increase in the government’s debt servicing costs.

In a statement on Friday, the party pointed out the “sharp” rise in debt servicing costs is “diverting vital public funds away from critical investments and social welfare programmes”.

A recent audit by the Auditor General revealed the government is now paying €261 million a year just to service its debt, marking a 22 per cent increase compared to the previous year.

By the end of 2024, the amount of outstanding government debt was close to €11 billion, an increase of €736 million when compared to the previous year.

The bulk of that debt (80%) is made up of government bonds issued to the public.

“This growing burden of debt servicing is a serious issue that requires urgent attention. This fiscal strain raises concerns about the sustainability of Malta’s public finances and its ability to invest in essential infrastructure, education, healthcare, and social services in the years to come,” Momentum treasurer Carmel Asciak said.

He argued that Malta’s economic growth “cannot be sustained if a disproportionate share of public resources is spent on paying interest on past borrowing”.

If this trend continues, we risk compromising the welfare of future generations, who will not only be burdened with repaying the debt but will also face reduced investments in critical sectors that are essential for long-term prosperity.”

Momentum urged the government to “improve fiscal management” by reducing unnecessary public spending and increasing budgetary efficiency.