Malta has €250m war chest to cushion energy price spike: Finance Minister
Clyde Caruana says Malta’s fiscal position is stronger than during Russia-Ukraine conflict
Malta has a "warchest" worth €250 million, over and above what it currently spends on subsidies, to potentially cushion the blow of the war in the Gulf, Finance Minister Clyde Caruana said in parliament on Wednesday.
Speaking in parliament, Caruana said authorities could dedicate a further €250 million, in addition to current allocations, to cover unexpected expenses brought about by the war in Iran without putting Malta’s fiscal targets at risk.
“The country has a headroom - meaning the flexibility that we have if the prices explode - that is equivalent to 250 million euros more that could cushion and take on the impact from abroad.”
He went on to explain that Malta currently spends €150 million a year on subsidies, while in 2022, when the world was hit by the outbreak of the Russia-Ukraine conflict, the island spent €350 million.
Malta has pledged to bring its deficit down to within the EU-approved threshold of 3% by this year. Caruana stressed the importance of retaining that percentage to maintain the amount available in Malta’s “warchest”.
Caruana’s comments come as concerns grow over the impact that rising energy prices could have on consumers and the country’s economy.
Oil and natural gas prices have surged since Iran threatened to close the Strait of Hormuz, a key route in the global oil and gas trade, raising fears of global shortages.
Cauruana assured that Europe was less dependent on oil from the Gulf than it was on Russian gas four years ago.
The price of gas is currently around €50 per megawatt-hour - seven times lower than it was four years ago, when it stood at about €350 per megawatt-hour, he added.
The difference in Brent crude oil prices, however, was less dramatic. Prices fell from around $120 per barrel in 2022 to about $90 per barrel this year.
Furthermore, the minister noted that Europe has made efforts to reduce its dependence on fossil fuels. In the space of four years, the EU reduced the share of electricity generated from fossil fuels from 40% to 30%.
In 2025, wind and solar overtook fossil fuel power in the EU for the first time.
Locally, authorities pledged to bolster energy subsidies should global prices increase, with Energy Minister Miriam Dalli last week promising that consumer prices will remain stable.
The government allocated €172 million for subsidies in this year’s budget, although official figures show that the final bill is usually lower than initially planned.
At their peak, authorities allocated as much as €580 million for energy subsidies in 2023 but ended up spending well under half that amount, at just over €227 million.