Malta to exit EU excessive deficit procedure after deficit falls to 2.2%

The European Commission is expected to recommend the end of the ongoing excessive deficit proceedings against Malta, following a reduction in the country's deficit levels.

Malta is set to be the only country removed from the excessive deficit procedure.

The recommendation will need to be approved by the Economic and Financial Affairs Council (ECOFIN) at its next meeting in July, although sources say this is expected to be a formality.

Economy and finance ministers from across the EU's member states will attend the meeting.

When presenting Malta’s fiscal forecast in April 2026, Finance Minister Clyde Caruana indicated that Malta could exit the procedure by the summer.

In April, Caruana announced that Malta’s deficit had fallen to 2.2% by the end of 2025, a full percentage point lower than the 3.2% previously forecast and below the EU’s 3% deficit threshold.

This marks the first time Malta’s deficit has fallen below the threshold since before the pandemic.

He added that Malta’s deficit is expected to continue declining in the coming years, with projections showing further annual reductions until 2028, even when Malta plans to continue expenditure to keep energy prices stable. 

Caruana also said the government had always intended to reduce the deficit gradually in order to safeguard economic growth.

According to the forecasts, which were described as conservative, Malta is expected to record budget surpluses in 2029 and 2030. The European Commission’s spring forecast, published in May, also projects Malta’s deficit will remain stable and decline slightly to 2.1% by 2027.