Malta poured €2 billion into EU budget since 2004 but received much more

Malta has contributed around €2 billion to the EU budget since joining the bloc in 2004, information tabled in parliament by Finance Minister Clyde Caruana shows.

In the current budgetary period that kicked off in 2021, Malta has so far transferred €649 million, an amount that is expected to supersede €1 billion by the end of the period in 2027.

Nonetheless, comparing Malta’s contributions with what it received in EU funds, the country has been a net beneficiary for the past 20 years and is expected to be so at least until 2027.

Caruana was replying to a parliamentary question by Labour MP Rosianne Cutajar, who asked for a yearly breakdown of Malta’s contributions to the EU budget.

The data pertaining to EU funds that came Malta’s way was sourced by MaltaToday from official government statements over the years.

The information shows that during the first budgetary period running between May 2004 and 2006, Malta paid €137 million to the EU. Nonetheless, this was offset by income from EU funds that totalled €189 million.

The latter sum was negotiated during the Copenhagen summit of December 2002 when accession talks with all 10 new member states, including Malta, were finalised, paving the way for the EU’s single largest enlargement.

During the financial period 2007-2013, Malta’s contribution to the EU totalled €460 million. Nonetheless, Malta managed to negotiate EU funding totalling €855 million, leaving the country a net beneficiary.

Malta’s contribution to the EU continued to increase in the financial period 2014-2020 on the back of substantial economic growth. During this period, Malta transferred €738 million to the EU budget but following tough negotiations, the country still managed to secure its status as a net beneficiary receiving €1.1 billion in EU funds.

In the current budgetary period that started in 2021 and will end in 2027, Malta is expected to receive €2.3 billion in EU funds. However, its contribution is expected to go north of €1 billion by the end of the period.

Analysing the figures and taking into account past statements by government ministers, by the end of 2027, 23 years after Malta joined the EU, the country would have been a net beneficiary of EU funds to the tune of around €2.4 billion.

The EU does not raise its own funds directly but receives contributions from the member states to finance its budget.

The EU budget comes from several sources, including a proportion of each EU country’s gross national income, based on its wealth and customs duties on imports from outside the EU.

Furthermore, member states also pass on a small part of the VAT collected by them and a contribution based on the amount of non-recycled plastic packaging waste in the country.

The EU budget is also financed through other revenue streams such as contributions from non-EU countries to certain programmes, interest on late payments and fines, as well as any surplus from the previous year.

These sources are known as the EU’s ‘own resources’. The EU has been discussing new own resources to diversify and reform its revenue streams.

The EU budget is based on the principle that expenditure must be matched by revenue, meaning that annual revenue must completely cover annual expenditure.

The European Commission is empowered by the EU Treaties to borrow from the international capital markets on behalf of the EU. Since 2021, the Commission has been raising funds on the capital markets to finance its post-COVID recovery plan, NextGenerationEU. These EU bonds will be repaid over a long period until 2058.

Malta with lowest contribution

Figures obtained from the European Commission website show that Malta’s contribution to the EU budget between 2014 and 2020 at €738 million was the lowest. Luxembourg’s contribution amounted to €2.4 billion while that of Cyprus amounted to €1.4 billion.

Germany, the EU biggest economy, was by far the largest contributor with €197.5 billion, followed by France with €152 billion and Italy with €114.3 billion.