IMF report urges cost-increasing measures to reduce car use in Malta

To effectively reduce car use in Malta, decisive measures are needed to raise the costs associated with driving, a report by the International Monetary Fund suggests.

The report released in February proposes higher fuel prices, raising vehicle taxes, and introducing charges for public parking spaces. Such measures “would help” address Malta’s infrastructural challenges.

Nonetheless, IMF notes that the Maltese government currently does not intend to pursue such measures.

The report entitled Taking Stock Of Infrastructure In Malta was prepared by Alexander Pitt, a senior economist in the European Department of the International Monetary Fund (IMF).

The article followed Pitt’s participation in a workshop held at the Central Bank of Malta.

The report praised Malta’s economic performance over the past decade, describing it as remarkable. However, it also referred to the strain caused by population growth and increased tourist arrivals on infrastructure, particularly in relation to congestion.

The Singapore model

Pitt noted that Malta’s size and population resembled those of several small- to mid-sized Central European cities, most of which have public transportation networks that consist not only of bus systems (like Malta) but also tram lines.

Furthermore, a significant portion of Malta’s land area is “artificial,” consisting mainly of buildings and roads. As a result, although car ownership is similar to that of the Balearics (and the EU as a whole), the number of cars per square kilometers of developed land—where the majority of traffic occurs—is double that of the Balearics.

“In Singapore, in contrast, where artificial land cover is almost twice the rate in Malta, car ownership is much lower, with a well-developed public transportation network including buses, metros, and light rail,” the report stated.

Large bus fleet

The report also positively noted that public transport in Malta is free for residents and that the bus fleet is relatively large – one bus for every 200 people, more than twice as many as in the Balearics.

However, while take-up has increased significantly, it remains limited, as travel times are relatively long, and buses are also affected by congestion.

Moreover, the report acknowledged that government was planning some initiatives to ease congestion by managing traffic flows better throughout the day and introducing express bus lines.

“However, reducing car use would likely also require measures to increase costs, for example, by raising fuel prices, increasing vehicle taxes, and introducing charges for public parking spaces, which the government currently does not intend to pursue.”

More roads, more cars

The report was also sceptical about easing congestion through more road building, noting that the road network was already very dense – nine kilometres of road per square kilometre, 21 times as many as in the Balearics, though only two-thirds of Singapore’s level.

“Experience in other countries suggests that the expansion of the road network only briefly relieves congestion, as car ownership and use tend to rise with more roads available,” the report said.

On the other hand, a rail-based public transport system could be effective in limiting congestion and offering attractive alternatives to car use. However, the report said that this would be either very costly (a metro would require investments amounting to about 34% of GDP, though spread over 15-20 years) or encounter geographic constraints. For example, a tram network, while more efficient than buses, would require space for its tracks, which would mostly have to be on the surface to contain costs.

The report identified transport as the area “where the need for action to ease congestion is urgent,” even though the costs for a sustainable solution are high, and implementation would take time. It is in this context that “pricing actions – on vehicle and fuel taxes, or parking charges – would be helpful.”

The report also referred to challenges in other sectors like energy, water supply, and wastewater, noting that power and water supply capacities are adequate in the short term, but investments to enhance capacity in the medium term are needed.

According to the report, the planned launch of a strategic development plan (the Vision Malta 2050) offers an opportunity to outline a longer-term development strategy. “Such a strategy, however, would also need to outline the investment needs and costs that arise from them.”