WATCH | Clyde Caruana would rather resign than withdraw energy subsidies

Finance Minister Clyde Caruana has warned worsening international instability could eventually lead to a recession, but insisted government will continue subsidising electricity and fuel prices “come what may.”

Speaking on TVM’s Xtra hosted by Saviour Balzan, Caruana insisted he would rather resign than withdraw energy subsidies, stressing that this would have serious consequences on Malta’s economy.

The discussion was held just three weeks before the upcoming budget, which will be the sixth for Caruana, who underlined the importance of both responsibility and giving what was promised.

Looking ahead, the minister pledged that every measure promised in the Labour Party’s electoral manifesto will be implemented throughout its five-year legislature, reiterating again that: “Even God needed six days to create the earth.”

Energy subsidies will continue ‘come what may’

Caruana insisted government will continue subsidising electricity and fuel prices “come what may,” despite warning that worsening international instability could eventually lead to a recession.

He recalled that, even before the last election, he had been speaking about Malta’s financial “war chest” in anticipation of rising energy prices.

However, he acknowledged that the conflict in the Middle East has continued for far longer than initially anticipated. “It’s also worse than anyone expected,” he remarked.

Finance Minister Clyde Caruana featured as a guest on TVM's Xtra with Saviour Balzan (Photo: James Bianchi/MaltaToday)

Caruana warned that if the international situation continues to deteriorate, something will eventually have to give, whether through changes in demand or a recession.

Despite this, he reiterated his commitment to maintaining energy subsidies, insisting that he would rather resign than see government withdraw them and pass the financial burden onto consumers.

He drew parallels with the outbreak of the Russia-Ukraine war in 2022, which placed considerable strain on global energy markets.

“Five years ago, we kept doing what we were doing while other countries fell behind,” Caruana said. “We had these challenges in the last legislature and we gave everyone a response. We will do the same now.”

Caruana acknowledged that the subsidies could result in some waste of public resources, something he said troubled him as both a politician who believes in social justice and an economist.

However, he warned that any attempt to scale back the subsidies could create uncertainty, prompting fears that government was preparing to increase energy prices.

He explained that such uncertainty could undermine consumer confidence, causing people to spend less and potentially inflict greater economic damage.

“It might be possible that we are wasting €10 or €20 million, but if economic sentiment drops, I am too afraid of losing a lot more than that,” he said.

He also stressed the importance of explaining the international situation to the public, arguing that people would understand the need for government’s decisions if they were presented with the facts.

“I don’t believe people are stupid, and because they are not stupid, they will understand when we explain,” Caruana said. “They understood us in 2022 because we explained, and I’m sure they will today as well.”

He noted that Maltese people were well aware of developments abroad, whether through international news, travel, or relatives living overseas.

Pointing to the situation in France, which he described as being “burned to the ground” by protests over the financial burdens being faced by its population, Caruana argued that Malta’s subsidies were shielding consumers from similar pressures.

“People in Malta are being given the peace of mind of knowing that those burdens will never be here,” he stressed.

Infrastructure and government spending

Amid growing complaints about the state of Malta’s infrastructure, Caruana acknowledged that government had failed to invest enough in previous years, insisting that it must now make up for what was not done.

He said a “substantial amount of money” would be allocated in the upcoming budget to meet the country’s infrastructure needs.

At the same time, Caruana said the Budget would introduce adjustments aimed at ensuring public resources are used more efficiently, particularly in ministries and government agencies where spending has become excessive.

He explained that throughout September, the finance ministry holds meetings with individual ministries to assess their progress and determine whether allocated funds are being put to good use.

“I can tell them: ‘You’ve been talking about this for two years, or three years, and you still haven’t done anything. So, we won’t be giving you money for it anymore.’”

Caruana insisted that while the finance ministry must be tough on government spending, it must also ensure that every ministry has the resources it needs to operate effectively.

Construction is ‘very loud’ about what it does, Caruana says

Questioned by Balzan about Malta’s construction sector, Caruana rejected claims that the country is excessively dependent on the industry or that everyone benefits from it.

He argued that, unlike other sectors, construction is “very loud about what it does,” making it more prominent in public discourse.

When pressed for his personal opinion on the issue, Caruana said he had never shied away from expressing his views, but stressed that decisions concerning the sector rested with government as a whole, rather than with him individually.

Tax evaders can expect a letter in the post

Questioned about tax evasion, Caruana reiterated his warning that tax evaders can expect to receive “a letter sent to their homes” from the finance ministry in the coming days.

He also claimed to be the first finance minister to tackle tax evasion so forcefully, acknowledging that his approach had not made him any friends.

Caruana has ‘iron nails’ in his shoes over KM Airlines

Turning to KM Airlines, Caruana referred to former prime minister Joseph Muscat’s remarks following Yorgen Fenech’s acquittal, when he said he had “pebbles in his shoe” over the situation.

Caruana, in another biblical reference, said he had “iron nails pressed into the soles of his feet” when it came to the national airline, suggesting he had much more to say on the matter but was waiting for the right moment to speak.

“This is a delicate time, and for now I will hold back from giving comments,” he said. “When the time is right, I will speak. I will even invite the Opposition for a debate. I need a lot more than an hour to say what I have to say.”

Despite his reservations, Caruana expressed confidence in the airline’s future.

Asked where someone should place their money when betting on KM Airlines, he replied: “The bet you should make is that the company has a future.”

Tourism: ‘You can’t walk in Valletta’

Caruana also addressed concerns over tourism in Malta, acknowledging the overcrowding experienced in Valletta and other popular destinations during the summer months.

“It’s impossible for me not to be aware of this problem,” he said.

As a solution, Caruana proposed spreading tourist arrivals more evenly throughout the year, rather than allowing them to remain concentrated during the summer months.

He questioned why high-quality tourists would choose to visit Malta during the peak summer season, when overcrowding means there is barely enough space to lay down a towel on the beach.