Watch: Malta’s low fertility is ‘greatest challenge of our time’ - Clyde Caruana

Malta’s rock-bottom fertility rate is “the greatest challenge of our time,” finance minister Clyde Caruana told social partners on Friday.

Speaking at the launch of the annual pre-budget document, Caruana suggested the upcoming budget may include measures that reward larger families. 

"We need to encourage more families to have at least two children," he said.

He echoed Archbishop Charles Scicluna’s warning earlier this week that Malta faces “ethnic extinction” due to its low fertility rate.

Caruana said figures show 60% of families who have a child never go on to have a second.

“Where will our population be in 50 years’ time?” Caruana asked. “Will we be at a point of no return?”

“In 1985, the year I was born, there were around 6,000 Maltese children born. Now it’s down to 3,000. So each year, there are 3,000 fewer Maltese around,” he said.

Caruana accused the political class of wasting its energy on petty issues while ignoring the elephant in the room.

“It’s a shame that politicians don’t speak about this because it doesn’t win us votes at the next election,” he said.

“Let’s not waste our time on trivial issues. There will come a time when even elections won’t be interesting because the population would have shrunk too much,” he added.

Caruana linked the issue of Malta’s declining fertility with its poor educational ambitions, calling on individuals to place greater value on improving their skills.

The families who have more than two children are those with a higher income, he said.

“So to have more children, you need to have higher income. And they have higher income because those parents invested in their skills. This is where we need to push,” he said.

Although last year’s budget introduced financial incentives to encourage families to have children, Caruana admitted that this is just the tip of the iceberg, with families facing not just financial barriers, but also a lack of time.

“The measures we implemented are steps, but future steps need to be greater,” Caruana said.

A ‘fiscally responsible’ budget

Turning to next month’s budget, Caruana said the government will be presenting a “fiscally responsible” budget that will allow Malta’s economy to continue growing at a steady pace.

Last month, Robert Abela promised “the best budget in the country’s history,” vowing to implement measures to strengthen workers’ conditions.

Although the budget date is not yet known, Caruana revealed that it is set to be announced by Abela over the weekend.

Photo: Matthew Mirabelli.

It will be a budget that “continues to take care of its people,” Caruana promised, calling out several European countries introducing welfare cuts to increase defence spending.

“The welfare state, the cradle of the Europe, is being dismantled piece by piece,” he said. “This is not what I want for our country”.

In a sweeping speech outlining Malta’s economic progress over the years, Caruana described Malta’s economy as one that provides “peace of mind” in the face of turbulent international affairs.

“Malta’s economy is very susceptible to external shocks,” Caruana said, pointing to an ongoing trade war over tariffs, as well as the wars in Ukraine and Gaza.

Energy and food subsidies to stay

However, Malta’s GDP growth will remain stable around the 4% mark, roughly three times higher than the EU average.

Likewise, its deficit is set to drop within the EU’s accepted level of 3% over the coming years.

And although Malta’s debt in absolute terms is higher than ever, topping the €11b mark, the burden of this debt has continued to shrink to 48%, well below the EU’s expected threshold of 60% and far below the EU average of 82%.

Energy and food subsidies are set to stay for the time being (“we were criticised by many, including the EU, over subsidies but they are now doing what we did,” Caruana quipped), but they have now dropped from 1.8% of Malta’s GDP in 2022 to 0.7% today.

Caruana pointed to Malta’s growth in employment as the driver behind Malta’s economic success.

He described himself as “happy and proud” that Malta has risen from the bottom of the EU’s employment participation table to the top over the past years.

And while the government’s expenditure has continued to increase, Caruana said it is growing at a slower rate than the government’s income.

Caruana described the government’s efforts to increase its income through better tax collection as a “silent revolution” that allows it to up its spending without increasing taxes.

When asked about Malta’s position over the EU budget, which was first proposed before the summer break, Caruana remained coy, saying that it is still too early for any country to adopt a clear position in the face of delicate negotiations.