Budget 2025: PN misreads debt figures, minister says as burden drops to 49%

Finance minister Clyde Caruana berated the Opposition over its misleading statements over the state of the economy, based on the rate of the growing national debt.

The Nationalist Party often issues missives over the increase in the country’s debt in terms of the nominal millions by which it increases thie year.

But Caruana accused the PN of proffering an incomplete analysis because at no time do they mention the rate at which the economy grows, and how this actually affects debt burden,

Since 2013, the Maltese economy has grown by 200%, from €7 billion a year to over €22 billion today. “The growth of the economy has therefore led to a reduction in the debt burden over the years,” Caruana said.

As a proportion of GDP, debt is expected to stand at 49.5% in 2024 and 50.1% in 2025. “A pandemic has just passed, we have paid out large subsidies after exploding energy prices on international markets and reducing our debt burden to 50% – 10 percentage points below the 60% set by European rules,” Caruana said.

“When Labour was elected to government back in 2013, the debt burden stood at almost 70% of GDP. Today after 12 years and everything we’ve gone through, this figure has dropped below 50%. Facts and numbers speak for themselves.”

Caruana also said tax collection and enforcement had grown exponentially in the first six months of 2024, with €300 million in tax arrears collected.

So far, over 1,200 payment agreements have also been concluded with taxpayers with tax balances, with the percentage of tax returns sent on time rising from 73% in 2023 to 93% in 2024.

An unprecedented investment of €68 million will be spent over a decade to install a digital and integrated IT system that combines various revenue-collecting functions.

“Eventually, through this digital platform, anyone who is due to pay tax will be able to verify their tax status at the time,” Caruana said.

“It is important that everyone understands why this side of the House is better at managing the country’s finances. Through this Budget, we are not only able to abide by European rules, but we will continue to help the economy, give back more to people, and above all make sure that we continue to reduce our country’s deficit rate and debt burden.”

As part of new EU rules, member states are obliged to present a Medium-Term Fiscal Structural Plan to the Commission every year, explaining the trend of the country’s fiscal position for the coming years. “I am pleased to say that we and only another state respected the 20th September deadline. This is not a matter of boasting, but such steps strengthen our country’s credibility because we show that we know what we want and where we want to get there.”

The indications are that Malta will manage to bring the deficit down to 4.0%, with 2025 seeing a further decrease to 3.5%, 3% in 2026, and 2.6% in 2027.

“In other words, while European rules allow four years to go below 3%, we will manage to do so in two years by respecting what is called the ‘minimum effort’ by reducing the deficit by 0.5% each year.”