Removal of Malta from excessive deficit procedure is 'best certificate' for government, Abela says

Malta reached its fiscal targets well ahead of the time agreed with the European Commission, Prime Minister Robert Abela said in the first press conference of this legislature on Thursday.

He said the country was the only EU member state to have been removed from the excessive deficit procedure.

"In the last few hours, the government was given the best certificate of its work and so we look to the future with great optimism," Abela said. "The national debt as a proportion of national income is on target to be reduced to 40% within this legislature."

The European Commission has formally written to the European Council to remove Malta from the excessive deficit procedure after the country's deficit fell to 2.2%, well below the EU's 3% threshold and against an EU average of 3.1%. The announcement came days after the Labour Party secured a fourth consecutive general election victory.

According to European Commission experts, Malta also has the best economic growth forecast in Europe for this year and next. Abela recalled that when he first entered Castille as Prime Minister in 2020, a global pandemic had just broken out, and he faced a choice between applying austerity measures or shielding families and businesses at a greater short-term cost to the public finances.

He said his government chose the latter, and described critics who warned of rising national debt at the time as having misunderstood the nature of that spending.

"That was not debt; it was the best form of investment we could make in our families and businesses," Abela said, adding that the same protective approach had been applied through every subsequent crisis, including the war in Ukraine, energy price shocks, and supply chain disruption.

Finance Minister Clyde Caruana provided a technical breakdown of how the exit was achieved. He noted that Malta had opted for the faster of two available correction routes under the EU's reformed fiscal rules, choosing to bring its deficit below 3% within four years rather than seven. In practice, the adjustment took only two years since the country was placed in an excessive deficit procedure. The deficit stood at 8.7% in 2020 and fell to 2.2% in 2025.

Caruana said the average annual reduction over the past five years was 1.3 percentage points, and that the forecast going forward was more conservative, projecting a reduction of 0.6 percentage points per year, roughly half the previous rate, in order to absorb external pressures and deliver on the electoral manifesto.

He also noted that while other European countries were seeing their deficits worsen, the opposite was true for Malta, with the Commission projecting that by 2027, 13 EU member states would be under the excessive deficit procedure, roughly half the bloc. Caruana added that Eurostat confirmed on the same day that Malta had the lowest inflation rate among euro area countries, and said that government revenue in April had come in well above expectations.

He said he expected revenue to continue to strengthen throughout the year, which would allow the deficit to keep falling while the government continued to invest in the economy. He added that the national debt as a share of gross domestic product was on course to return to levels last seen around 30 years ago by the end of the coming parliamentary term.

Abela said the government would press ahead with its electoral commitments, including extended maternity, paternity and parental leave, full state coverage for therapy costs for parents of children with disabilities or divergent conditions, a three-year income tax exemption on the first €30,000 earned annually for young people entering full-time work or starting a business, a €1,000 annual super bonus for all workers, expanded IVF support, and additional help for first-time buyers.

He also confirmed that work had begun on turning White Rocks and Manoel Island into national parks, alongside the regeneration of the Grand Harbour area