This system requires reform to build public confidence and protect low- to middle-income individuals from undue financial burdens. Under the Duty on Documents and Transfers Act, government-appointed architects inspect properties to ensure declared prices match market value. While I support efforts to prevent tax evasion through undervaluation, the process is often inconsistent due to anomalies and subjectivity. For example, if a declared value is less than 85% of the actual market value, authorities assess additional duty and interest, though taxpayers retain the right to appeal. Historically, widespread property undervaluation led to significant government revenue losses. Although the system has existed for years, critics, including myself, argue it is now flawed due to rising property prices, subjective valuations, and the financial strain on honest buyers.

The construction and property markets have expanded significantly under the PL government. The stability and growth of Malta’s property market depend on transparent and fair tax assessment systems. For real estate to continue driving economic and social progress, buyers must trust that duties are predictable and reflect actual market conditions. Arbitrary financial burdens or outdated assessments undermine confidence and place unnecessary pressure on families. Surely, improvements should include using the Promise of Sale (POS) date for all valuations and exempting bank-financed residential purchases from mandatory inspections. Banks already conduct their own valuations to protect their collateral, making price manipulation unlikely, as they also have their own architects. I am a banker myself, so I know how the system works.

The current legal framework gives the Commissioner broad oversight and enforcement powers to ensure duty is collected on the true property market value. The Commissioner or authorised architects have unrestricted access to properties when undervaluation is suspected. Well, I support efforts to prevent under-declaration and promote fairness. However, implementing these powers has introduced operational challenges that impact the system’s efficiency and fairness. Property prices in Malta have grown steadily, averaging 8% to 10% annually. Under the Duty on Documents and Transfers Rules, the valuation date is typically the POS date. However, specific rules state that if improvements are made between the POS and the final contract, the valuation date shifts to the date of transfer. In practice, even without improvements, government-appointed architects often inspect properties up to 12 months, and at times even more, after the contract, basing valuations on the inspection date rather than the POS date. This approach fails to account for rapid price appreciation during the intervening period, particularly affecting first-time buyers facing inflation and market volatility. This surely happened between 2022 and 2025 due to the war in Ukraine and the period of high inflation.

The system faces expertise gaps, relying mainly on government-appointed architects whose market valuations are often subjective. These architects may overlook factors that lower prices, such as urgent sales or legal restrictions. While purchasers can submit private valuations, the authorities have full discretion to accept or reject them, often favouring internal assessments over qualified private reports. The current system places hidden burdens on honest buyers, especially those already financially stretched. Many, particularly first-time buyers, depend on bank financing and have no incentive to under-declare, as banks require accurate valuations for loan security and collateral protection. When the Capital Transfer Duty department issues assessments months or years after the transaction, buyers face significant additional duty and interest, threatening their financial stability and contradicting election promises of support. These systemic issues require fundamental policy reform.

For example, I encountered a case involving a class 4C shop that a buyer intended to convert into a flatlet. The 80-square-metre property was priced at nearly €150,000, with an additional €60,000 needed for essential upgrades. After contesting an initial penalty of over €10,000, the purchaser still paid more than €4,000. The issue arose because the appointed architect valued the property as commercial, despite its approved conversion to residential use, highlighting the system’s subjectivity and errors. Besides, the uncertainty exerted on purchasers leaves them without proper planning, waiting at the discretion of the tax authorities. It is truly unjust.

A modern duty assessment system should prioritise predictability, transparency, and the elimination of arbitrary discretion. The POS date must serve as the consistent valuation benchmark to ensure buyers are taxed on the agreed value. Certainly, to address annual price increases, a mandatory reduction should apply to assessed values if inspections occur more than three months after the POS date. Properties with bank valuations, especially for first-time buyers and primary residences, should be exempt from government inspections. Recognising bank valuations for tax purposes would reduce administrative burdens and protect honest buyers from unexpected financial strain.

Besides, the authorities can explore the Public Duty Database model. A transparent public portal would allow purchasers to enter a property’s address to see the exact duty payable before committing to a purchase. Similar systems are applied in France to check the physical and transition risks of climate. We can use it as part of our collateral valuation systems too. Crucially, under this model, duty would be payable based on the database value irrespective of the price declared in the contract. And it can also consider other specificities that are not subjective. Certainly, it removes administrative discretion, provides absolute certainty for purchasers, clarity, and eliminates the motive for under-declaration.

Surely, for the average citizen, these reforms provide a critical social safety net. They ensure that families and first-time buyers are protected from unexpected additional duties and interest caused by systemic delays or inaccurate valuations. When purchasing a property, it is important to understand that the final decision-making authority lies with other parties rather than the buyer.

The post The promise of sale date must guide property valuations first appeared on The Malta Business Weekly.

The Freeport has faced growing competitive pressure from ports in North Africa, particularly those in Egypt and Morocco, which have significantly expanded their infrastructure and capacity in recent years. The use of these ports automatically avoids paying any ETS charges. Thus, it stands to reason that several shipping services have already shifted operations away from EU ports, resulting in non-EU hubs capturing the majority of new transhipment business. Difficulties of passage due to the Houthis firing on vessels passing through the Red Sea compound the issues. Therefore, the recent revision of the ETS for the Freeports of Malta, Cyprus and Greece did not come a moment too soon.

The key points of the Commission’s latest proposal are certainly highly relevant to us. The revisions aim to cut emissions while addressing industry concerns about competitiveness and carbon leakage, especially by tackling the shift of transhipment business from EU ports to non-EU hubs in North Africa. The Malta Maritime Forum (MMF) and the Maltese authorities have responded positively to these revisions to the ETS while emphasising that further refinement is needed. Much-desired improvements include the removal of ETS charges on certain cargo arriving from non-EU ports that is not destined for the European market. This shall provide direct relief for transhipment hubs such as Malta Freeport.

Malta requested amendments by way of an extension of the “neighbouring ports” clause to cover competing ports across North Africa. Also of beneficial effect is the extension of the ETS scope to certain smaller vessels, thereby lowering the threshold towards 400 GT in selected categories. This shall improve the level playing field, together with the simplification of monitoring, reporting and verification rules, as well as alignment measures with FuelEU Maritime. Readers will learn that new provisions are intended to avoid double carbon pricing if, or when, a global International Maritime Organization (IMO) measure is adopted. In a nutshell, one may explain that a vessel can be fully compliant under the ETS by buying allowances while still facing FuelEU penalties, unless it is generating surplus credits, depending on the fuels it burns.

The Minister for Shipping and Maritime Affairs, Dr Miriam Dalli, appreciated the support mechanisms and revenue allocations that benefit island member states. In some related contexts, these include dedicated ETS revenue allocations for Malta, Cyprus and Greece, applicable until 2038. The Minister for Energy and the Environment welcomed the package, describing it as a reflection of Malta’s long-standing advocacy. She noted that it reinforces protections for the Freeport and air connectivity, while striking a balance between climate goals and the practical challenges faced by island states.

On the other hand, the MMF welcomed the direction of the proposals as a step forward, particularly the transhipment-related relief and the extension of the neighbouring ports clause.

At the same time, consistent with its earlier advocacy throughout 2025 and 2026, the MMF stressed that further reforms remain necessary to fully protect the long-term competitiveness of Malta’s maritime industry. So far, considerable risks have existed with regard to business and carbon leakage to North African ports, higher costs for short-sea and trailer operations, and the need for stronger alignment with, or eventual supersession by, a global IMO framework. Dalli cannot rest on her laurels, given that the proposal is still at an early legislative stage. As can be expected, it will now be negotiated by the European Parliament and the Council. These negotiations are planned to start in autumn with a possible agreement in 2027 and subsequent implementation. Industry stakeholders, including the MMF, are expected to continue pressing for additional safeguards during that process.

While one appreciates that a great deal has been achieved to safeguard the interests of the Freeports of Malta, Cyprus and Greece, one may nevertheless question the taxonomy of the terms used. In this instance, one can elaborate that the ETS and FuelEU Maritime are both complementary EU regulations targeting greenhouse gas emissions from shipping, but they operate on fundamentally different principles, measurement methods and compliance mechanisms. So far, the detailed interaction rules are still being clarified. For instance, if one buys all the required EU Allowances (EUAs) under the ETS, there still remains the obligation to improve the average greenhouse gas intensity of the energy used on board through biofuels, LNG, methanol, ammonia, hydrogen, shore power or other cleaner alternatives. The system rewards lower-carbon fuels and, in fact, many agree that complexity is unlikely to disappear. Consequently, a vessel can be fully compliant under the ETS by buying allowances while still facing FuelEU penalties, depending on the fuels it burns.

Conversely, switching to lower-intensity fuels reduces both the ETS bill and helps meet FuelEU targets. The July Commission review of the EU ETS introduced simplifications and closer alignment between the two regimes, especially in relation to monitoring and reporting, but they remain distinct instruments with different compliance obligations.

In conclusion, Minister Dalli deserves considerable recognition for her efforts to date, while the Freeport should continue engaging in negotiations to secure further improvements to the current arrangements.

The post Freeport – Progress on ETS port charges first appeared on The Malta Business Weekly.

Between 2022 and 2025, three core expenditure categories under the European System of Accounts (ESA 2010) framework – compensation of employees, intermediate consumption, and social benefits – formed the backbone of Malta’s public finances. Together, these three items accounted for just over two-thirds of total government expenditure and represented roughly 29% of Malta’s Gross Domestic Product (GDP). The general government accounts compiled by the National Statistics Office (NSO) capture the operations of central government ministries and departments, local councils, and Extra Budgetary Units (EBUs), which are legally distinct non-market units with full account sets that can incur liabilities and generate non-tax revenues. Examining the granular sub-components of these three expenditure pillars reveals distinct structural drivers across the Maltese public sector.

By 2025, total compensation of employees reached €2,408.7 million, marking a cumulative nominal expansion of 31.1% (€571.9 million) over the 2022 baseline. Despite this absolute expansion, public sector wage expenditure, as a share of GDP, contracted slightly from 10.2% in 2022 to 9.8% in 2025, demonstrating that nominal economic growth outpaced employment cost expansion over the full horizon. The growth dynamic was driven by two structural mechanisms: net headcount expansions and shifts in average wage levels.

General government headcount expanded continuously between 2022 and 2025. Recruitment was concentrated in public administration (NACE 84), education, health, and residential care activities. Headcount growth within NACE 84 was propelled by institutional capacity additions within ministries as well as entities under ministerial remits, notably transport and education authorities. EBUs and local councils also accelerated their contribution to total headcount expansion in 2024 and 2025 compared to the preceding two years. Across the entire 2022-2025 period, net employment additions accounted for slightly less than one-third of total wage bill growth.

The primary catalyst for wage bill growth, however, was average wage expansion, which was dictated by multi-year collective agreements. The overall outlay peaked in 2024 with a year-on-year increase of €266.9 million, driven by a 12.1% jump in average compensation. This spike was overwhelmingly caused by the implementation of the 2024 educators’ collective agreement, which entailed significant rate upward revisions and substantial backdated wage arrears for over 16,000 State-employed teaching, administrative, and support staff. This was followed by the broader 2025 civil service collective agreement affecting approximately 33,500 employees, alongside sector-specific agreements for the Police Force and nursing staff.

Intermediate consumption – representing operational purchases of goods and services used to deliver public services – exhibited the steepest rate of expansion among all major categories. Spending rose by 56.8% (€740.4 million) between 2022 and 2025, climbing to €2,043.9 million. Consequently, intermediate consumption expanded as a proportion of GDP from 7.2% in 2022 to 8.3% in 2025.

From an industrial classification (NACE) perspective, public administration (NACE 84) accounted for the single largest share of growth, explaining nearly the entire increase in 2022 and over half of the expansion in 2025. From 2023 onward, health (NACE 86) and residential care activities (NACE 87) generated strong, steady upward pressures on procurement volumes.

Decomposing intermediate consumption by functional spending category highlights the operational predominance of State entities.

• EBUs and local councils: EBUs accounted for roughly 36% of annual growth between 2023 and 2025, and nearly all growth in 2022;
• Programmes and initiatives: Outlays expanded notably in 2024 and 2025 due to transient diplomatic and administrative responsibilities, specifically Malta’s presidency of the Organisation for Security and Co-operation in Europe (OSCE) in 2024 and the Presidency of the Council of Europe in 2025;
• Operational and maintenance: General operational costs, including facility maintenance, outsourced cleaning, IT, security, and professional consultancy, consistently generated around 25% of annual growth between 2023 and 2025; and
• Capital-related intermediate outlays: Feasibility studies, technical design, and pre-development project management for infrastructure fluctuated over the period, providing positive growth contributions in 2025 while registering negative contributions in 2022.

Social benefit expenditure grew by 29.2% (€449 million) between 2022 and 2025, totalling €1,988 million. Because nominal economic growth remained robust, social transfers as a ratio to GDP declined from 8.6% in 2022 to 8.1% in 2025.

Cash transfers constituted the bulk of total spending and served as the main engine of expansion. Retirement and entitlement payouts grew consistently, driven by statutory Cost-of-Living Adjustments (COLA), supplementary discretion-based pension increases above baseline COLA, and an expanding pool of retirees. Beneficiaries of the primary entitlement – the two-thirds pension – grew by approximately 2,000 individuals annually, expanding from 58,000 in 2022 to nearly 64,000 in 2025. This demographic growth was partially counteracted by the statutory, phased increase in the minimum retirement age to 64 in 2022 and 65 in 2026.

Other non-pension cash benefits also expanded, including elevated child allowances, in-work benefits, stipends, carers’ grants, disability assistance, and the targeting mechanism introduced in 2022 – the additional COLA targeted at low-income households.

Conversely, unemployment benefit outlays remained negligible due to tight labour market conditions and record-low unemployment. Non-contributory social assistance spending grew by only €6 million over the timeframe, while total beneficiaries fell by approximately 1,700, assisted by structural labour market initiatives like the tapering of the benefits scheme.

Social benefits in kind maintained a small relative share, with growth peaks in 2023 driven by policy expansions in free State-sponsored school transport and generalised childcare provision.

The structural trends detailed in the Central Bank of Malta’s analysis carry important implications for public finance management, structural expenditure rigidity, and long-term fiscal sustainability.

A key insight from the CBM study is the entrenched rigidity of Malta’s primary spending lines. Increases in employee compensation and cash social benefits are structurally inelastic downward. Multi-year collective agreements (such as the civil service and educators’ contracts) lock in higher baseline wage floors and recurring allowance structures for years. Similarly, base pension increases and indexation mechanisms permanently adjust the expenditure baseline upward.

While nominal GDP growth temporarily contained these items as a percentage of GDP between 2022 and 2025, these non-discretionary commitments create an asymmetrical fiscal risk. If nominal GDP growth slows, these rigid outlays will automatically ratchet up the overall spending-to-GDP ratio, squeezing the fiscal space available for public capital investment, that is so much needed to counterbalance the stress of a growing economy.

Because baseline commitments like payroll and social benefits are structurally rigid, any economic slowdown or disruption to corporate and personal income tax inflows would create severe, asymmetrical fiscal risks. Such a revenue shock would rapidly blow out the fiscal deficit, forcing sharp public debt escalation or disruptive expenditure cuts.

Unlike civil service payrolls or statutory social benefits, intermediate consumption is nominally considered a discretionary expenditure item. Yet, it recorded the highest rate of growth (+56.8%), expanding significantly as a share of GDP. A substantial portion of this growth stems from EBUs.

Because EBUs operate with autonomous budgets outside direct departmental line-item treasury control, their rapid expansion introduces operational risks into government finances. While EBUs generate non-tax revenues that offset part of their fiscal burden, the current level of disaggregated reporting makes it challenging to evaluate whether their intermediate operational outlays, such as consultancy, professional services, and operational maintenance, deliver proportional economic value.

To maintain fiscal discipline under the revised EU Framework for Economic Governance (Directive EU 2024/1265), the State will likely need to enforce systematic spending reviews and enhanced reporting standards (for example, within the annual Economic Survey and Half Yearly Report) specifically targeted at EBUs.

The steady addition of roughly 2,000 new two-thirds pension beneficiaries each year underscores ongoing demographic aging. Although recent increases in the legal retirement age (reaching 65 in 2026) provided temporary fiscal relief, statutory retirement age adjustments have reached their current legal ceiling.

Going forward, organic demographic pressures on cash social benefits and public health spending (NACE 86/87) will compound. Without further structural reforms to boost productivity, lengthen labour market participation, or streamline State procurement, health and pension costs could create persistent, structural spending pressures on Malta’s public finances.

The post The expenditure ticking clock: Structural spending and Malta’s fiscal vulnerability first appeared on The Malta Business Weekly.

I have already written about this in one of my opinion pieces back in 2025. My point in revisiting it is not to argue against NATO’s work. Au contraire, NATO can do what it feels is best in the interest of transatlantic and European security, which we are part of in any case under the EU-NATO Cooperation, and which we contribute to that forum. However, my central point is Malta’s neutrality clause and the PL’s longstanding commitment, which remain distinct from NATO’s work. These are rooted in the PL’s supporters’ mindset and the Labour Party’s grassroots, passed down through generations by Dom Mintoff, and in a shared view held by the majority of Maltese people.

Malta has been invited to the NATO Parliamentary Assembly since May 2024. This is not NATO membership, nor does it affect Malta’s constitutional neutrality. The NATO PA is a parliamentary forum, not a military structure. Neutral countries, including Austria and Switzerland, participate to understand security developments, contribute their views to democratic oversight, and engage in Euro-Atlantic dialogue without joining NATO. We already had a similar set-up through the Political and Security Committee of the EU and the North Atlantic Council. When I was posted in Brussels, we often met with ambassadors from the Political and Security Committee of the EU, of which I was Malta’s representative under the Lisbon Treaty, and the North Atlantic Council. These meetings took place four times a year, and we were informed about security developments because the Political and Security Committee of the EU works closely with NATO on different programmes of interest to avoid replicating missions and initiatives. This is why the EU and NATO meet almost every two years to negotiate areas of cooperation.

I always said that the Political and Security Committee of the EU is an important committee that must be given due attention. Frankly, in the past, we used our relationship in Brussels to understand what is happening from a security point of view. Well, the reasons why I left my post in Brussels were twofold. Firstly, I wanted to retrain as an economist specialising in ESG risk within the banking and financial industry, and secondly, it is better left unsaid. Certainly, I did not know that I would end up in politics, with a campaign for the MEP elections in 2024, and another for the general election, the last one being successful in both the second and ninth districts with a casual election. Now that I have been sworn in as a Member of Parliament with the PL, we are offered roles on the backbench, including standing committees chairing, membership, or head of delegations.

The government needs to appoint different heads of delegation, including that of NATO. Notwithstanding that I have ample experience in this area, and security was part of my work in the past, I was always on the side of the EU’s Political and Security Committee, distinct from NATO’s structures. Hence, I conveyed my disinterest in the latter. Certainly, I appreciated the nomination to become a member of the Economic and Financial Standing Committee, as well as a member of the Information Technology and Artificial Intelligence Affairs Standing Committee. The reason I appreciated these committees is that I shied away from the topic of security and defence in the past years, as stated in a recent interview. Technically, the topic of security and defence is essentially controversial unless you bow to certain debatable requests.

Indeed, I will focus my expertise as a member of the Economic and Financial Standing Committee and continue writing and sharing my ideas on aspects relating to the economy, sustainability (ESG) and now also Artificial Intelligence and information technology. And if they need my expertise on the Sustainability Standing Committee, I am happy to help, too. To conclude, the clip of Dom Mintoff with Dan Rather gathered over 120,000 views on my social media in less than four days. This shows that Dom Mintoff and the NATO topic remain highly relevant, as many people still agree with Mintoff’s views 50 years later, in 2026. And frankly, hailing from Bormla, Dom Mintoff remains my idol politician!

The post 50 years later, Dom Mintoff’s political discourse remains relevant! first appeared on The Malta Business Weekly.

While the proposal stems from a genuine desire to alleviate immediate financial stress, tweaking the frequency or formula of the mechanism misses the root cause of the problem. Without addressing the underlying economic engine, altering COLA is merely treating a symptom rather than curing the disease.

Under the current framework, Malta’s COLA calculation is strictly tied to the Retail Price Index (RPI), which measures monthly changes in the cost of a fixed basket of consumer goods and services. The core issue with revising the COLA calculation to include a wider or updated array of modern expenses is that the RPI itself cannot simply be modified by decree.

Because the RPI framework dictates automatic wage adjustments across the entire economy, any structural update to its composition requires explicit agreement among all social partners – unions, employer bodies, and the government by achieving a consensus at the Malta Council for Economic and Social Development (MCESD).

Most importantly, whether COLA is increased, rewritten, or paid out bi-annually instead of annually, it will not effectively solve the purchasing power issues faced by low-wage earners.

COLA is fundamentally a reactive mechanism. It does not create new wealth; it merely tries to catch up with wealth that has already been eroded by inflation. Delivering this adjustment every six months might offer a brief psychological reprieve, but it does nothing to alter the baseline economic reality for a low-income household. A worker receiving a top-up twice a year remains trapped in the same low-value economic tier. The absolute value of their money remains low because the value of the labour they are providing hasn’t changed.

Increasing COLA or amplifying its payment frequency without an equivalent rise in productivity is economic tail-chasing.

When wages are legally mandated to rise without businesses generating more output or higher value, the immediate consequence is a spike in operational wage costs. To survive and maintain margins, businesses – particularly in low-margin sectors like retail, hospitality, and basic manufacturing – are forced to pass these costs directly onto the consumer.

The result is a classic wage-price spiral:

• Wages go up to match high prices;
• Increased wage costs force businesses to raise prices further;
• The worker returns to square one, needing another COLA increase because the previous one was swallowed by the new wave of inflation.

Ultimately, the tail is never caught, and the purchasing power never truly improves, while Malta’s international competitiveness slides downwards.

The only sustainable way to break this cycle and genuinely uplift low-wage earners is to transition from a quantity-driven economy to a quality- and value-driven economic growth model. The real solution lies in a much-needed increase in national labour productivity.

Rather than focusing on how to slice a stagnant economic pie more frequently, policy focus must shift toward aggressive investments in digitalisation and automation. By incentivising businesses to adopt advanced technologies, firms can produce higher-value outputs with greater efficiency. Crucially, these capital investments must be intrinsically linked to targeted upskilling programmes for the workforce. This is why it is so important to accelerate the rollout of additional attractive incentives that encourage businesses to expand their use of digital incentives.

When low-wage earners are trained to operate digital tools, manage automated systems, or pivot into high-value service roles, their productivity naturally increases. Businesses can then afford to pay substantially higher basic wages – not because they are legally forced to by an inflationary index, but because the worker is generating genuine, competitive value.

Malta cannot index its way to prosperity. True economic mobility for the country’s most vulnerable workers will not come from a bi-annual COLA mandated wage increase, but from an economy that empowers them to earn more through higher skills, better technology, and elevated labour productivity.

The post Tweaking COLA won’t fix purchasing power first appeared on The Malta Business Weekly.

This is my first summer in Malta, and the naysayers were right.

I was warned it gets hot. I didn’t quite realise how hot, and how intense the Maltese sun can be. And there has been little respite this year, with most of Europe having spent the last few weeks trapped under the same enduring heatwave, so even the usual escape routes north have offered little relief.

Just last week, July’s heat record was shattered, according to the Times of Malta, with the country experiencing its hottest July day on record with temperatures soaring to a sizzling 43.3°C. Walk through Valletta, Sliema or any Maltese town on a summer’s day and the reason is clear: the stunning limestone buildings sadly offer little shade, instead absorbing solar energy all day and releasing it slowly through the night, along with the concrete pavements and asphalt roads.

Malta is already the EU country worst placed to escape the heat. In a recent Eurobarometer survey, just 22% of Maltese people reported living within a five-minute walk of a green space, against an EU average of 50% – worse than every member state bar Romania. A follow-up survey found that only 51% said access to a green space was easy, compared with close to 100% in Denmark, Slovenia, Finland and Sweden. Perhaps an unfair comparison, as those countries do not have Mediterranean climates, but Malta’s summer heat is also compounded by having the lowest forest cover of any EU country, at just 4.3%.

Malta can’t control the climate, but it can control how it responds to it. The data indicates that it has more room to improve shade and access to green space than almost anywhere else in Europe – which also means more room to gain.

Green infrastructure is infrastructure

When we think about investment in infrastructure, we naturally think of roads, hospitals, schools and housing. But trees, parks and green spaces should belong on that list too. With temperatures rising across Europe, the case is no longer just an aesthetic one.

Studies across cities including Washington DC, Athens and Singapore, consistently find that increasing tree-canopy cover can measurably lower both air and surface temperatures. Air-temperature reductions are often in the region of 1–2°C, while pedestrian comfort may improve considerably more, since direct shade beneath a tree can substantially reduce the heat experienced by passersby. For a country like Malta, whose narrow streets already trap heat overnight, that difference is not marginal – it can determine whether the evening passiggata happens at all.

The health stakes are real too. More than 10,000 excess deaths have already been attributed to this year’s early heatwave in Europe with the vast majority aged over 65. Another study estimated that nearly 40% of deaths attributed to urban heat across Europe in 2015 could have been prevented had cities increased their tree cover to 30% of land area. Although forest cover and urban tree-canopy cover are not directly comparable, Malta’s 4.3% forest cover underlines the scale of its greening challenge and its opportunity.

Building on what already exists

Reassuringly, the conversation about making Malta greener has already begun. Project Green (projectgreen.mt) is creating and upgrading accessible and inclusive public parks and recreational spaces, and is striving to improve the quality of life for the people of Malta and Gozo. Its aim is to create eco friendly spaces a short walk from residents’ homes. These steps are hugely important, but Malta lacks one single, measurable national target around which to organise its efforts.

So, what if Malta adopted one – along the lines of: “By 2040, each Maltese and Gozitan resident should live within a five-minute walk of a shaded green space.”

Given that only 22% currently do, this is an ambitious but honest target – one that would give Project Green, local councils, and private property developers a shared metric to work towards, rather than merely a general direction of travel.

Thinking small to achieve something big

Malta does not have the space for large new parks, but it does have room for smaller interventions: pocket parks in unused corners, tree-lined pedestrian routes, green schoolyards, planted public squares instead of additional paving, and green roofs or living walls as standard features of new developments.

Species choice matters too. Malta’s native and Mediterranean trees – carob, olive, Aleppo pine, cypress and strawberry tree – are drought-tolerant once established, so greening towns need not place heavy long-term demands on the island’s water supply.

A business case, not just an environmental one

This is what may matter most to business readers.

Energy costs Research on US cities found that peak electricity demand rises by 2-4% for every 1°C increase in daily maximum temperature above a 15-20°C threshold, driven largely by air-conditioning load. Trees can help reduce this by cooling the ambient air and, more significantly, by shading buildings directly, cutting the demand for air-conditioning in the first place.

Property values This is one of the best-evidenced green-infrastructure effects globally. Studies have found that proximity to green space can add a significant premium to property prices. Even conservatively, a national shading target could also be considered a national property-value programme.

Footfall and retail Shaded, walkable streets keep shoppers outdoors for longer and encourage repeat visits, a pattern documented in several European high-street greening projects. To my knowledge Malta does not yet have a published local footfall study to cite. I believe the data exists so it may be worth publishing before the next round of streetscape investment, so the claim can be tested, rather than assumed.

Talent and tourism Malta already markets its climate and lifestyle to remote workers and international firms. A country that is visibly and measurably adapting to Mediterranean heat – rather than simply enduring it – makes a stronger pitch than one that is not.

None of this is to suggest that greening pays for itself instantly. What I hope to demonstrate is that green infrastructure can behave economically in much the same way as other infrastructure projects: an upfront cost with a quantifiable, compounding return.

A piece of a bigger puzzle

Importantly, this proposal needs not sit outside Malta’s national climate strategy. Instead, it supports one of its weakest areas.

The EU’s 2040 climate target commits member states to a 90% net reduction in greenhouse-gas emissions (relative to 1990 emissions) on the way to full climate neutrality by 2050. Malta’s own National Energy and Climate Plan sets a comparatively modest renewable energy target of 24.5% by 2030 – well below the EU-wide collective 42.5% goal. The plan itself attributes this gap to the island’s lack of space for solar and wind farms and the absence of rivers for hydropower.

Malta can’t simply generate its way out of this problem as larger member states can. With limited land for renewables, and cooling accounting for a growing share of energy use, reducing demand is especially important. Malta’s climate plan already recognises the need to cut heating and cooling demand, with the country recording the EU’s largest year-on-year increase in renewable heating and cooling in 2024, making Malta the fastest growing EU nation for green climate control over that year. A national shading target would therefore complement – not compete with – the existing energy strategy: reducing air-conditioning demand without placing further pressure on scarce land or water.

A concrete proposal (if you forgive the pun)

Malta already has many of the requisite building blocks in place: Project Green, cross-party interest, and community pressure. What is missing is a single national measure tying these efforts together, supported by incentives for incorporating greenery into new property and infrastructure developments. A five-minute shaded-green-space target could be embedded in planning policy, tracked by local councils and reported on annually, like any other infrastructure commitment.

Young trees planted this year will provide their greatest benefit not to us, but to generations to come. Malta has repeatedly shown that it can adapt and outperform its size. Measuring national progress by how much shade and green space we create, alongside how many roads and properties we build, would be a fitting next step – and, on the numbers above, a genuinely profitable and healthy one.

Beyond the economic case, proximity to nature is associated with lower stress, cleaner air and greater opportunities for summer exercise. Trees provide shade while helping to capture dust and pollutants. The benefits are environmental, economic, and profoundly human. What’s not to like?

Maria Darby-Walker is a non-executive director; Visiting Fellow, Oxford University and Business adviser / mentor

The post A five-minute walk to shade: Malta’s missing climate target first appeared on The Malta Business Weekly.

Disastrous local and regional election results in May heaped further pressure on Starmer, which became impossible to withstand after Burnham won a parliamentary by-election on 18 June, allowing him to run for leader. Burnham, regularly seen in his trademark dark T-shirt and casual jacket, has secured the backing of 379 of Labour’s 403 MPs, with no one mustering the 81 nominations required to challenge him.

But he will face the same unenviable challenges that beset Starmer, namely a tepid economy, high government borrowing costs, and irregular migrants arriving in small boats. The crucial reason Sir Keir has left office is that he lost the confidence of his own MPs. The enormous majority he won in the 2024 general election was largely squandered: his attempts to force through contentious policies, such as cuts to benefits, through coercion rather than persuasion resulted in embarrassing climbdowns.

Not to forget, Starmer faced unpredictable energy prices due to the US-Iran war and a volatile American president in Donald Trump. Being a strong doer, Andy openly argues that Britain needs a new economic model, not just tweaks. By contrast, Sir Keir squandered the political capital he had at astonishing speed with a series of U-turns and reinventions that voters hated.

Starmer returned Labour to power after 14 years in opposition in July 2024 with a landslide victory over the Conservatives, who had churned through five prime ministers in the tumult unleashed by the 2016 Brexit referendum.

Back to Andy, his most striking decision is not to make Ed Miliband chancellor but instead to appoint him foreign secretary. Can a stagnant economy now raise its head above the parapet and witness a shift toward devolution and a new economic model, following a 10-year national renewal plan aimed at ending a decade of instability? Britain (like Malta) certainly needs a “circuit breaker” moment, resulting in the biggest changes in 40 years.

Miliband, as foreign secretary, is seen in Brussels as more open to deeper EU alignment than Starmer, though not to rejoining. By contrast, Andy represents a shift from managerialism to transformation, from centralisation to devolution, and from caution to long-term structural change.

His popularity might be equally short-lived; however, the data suggest that the new Labour leader could build a more enduring electoral base by uniting Britain’s fragmented centre-left voters.

Later this week, he is expected to change the government’s stance on oil and gas exploitation, with a new energy secretary in place. As expected, Andy also promised to do something about the cost of living, with more detail on the “breathing space” he is offering hard-pressed families. By extending Manchester’s £2 bus fare cap, this would be a tangible step, different from the £3 cap under Starmer and Chancellor Rachel Reeves.

With energy prices rising again, there may be action to support commuters facing higher energy costs. Andy is lovingly nicknamed the “King of the North” for winning three successive elections to the Greater Manchester mayoralty, and his flagship idea is devolving powers to other cities to fire up Britain’s economy, including setting up a “Number 10 North” office.

One cannot underestimate his drive for change. In fact, he is reported as saying, “…if we want an economy and a country that works for all people and places… then it requires a new path to the one we’ve been on for the last 40 years”.

But such a monumental task requires boosting the construction of public housing and trying to resolve the homelessness crisis by pumping adequate resources into social care. Other spectacular changes include a new 10-year plan for Britain – to be unveiled later this year – and building a new economy, putting “life’s essentials back under public control”.

But he argues that people need “breathing space now”. Most feel that solutions need to be found to tackle the cost of living.

Other changes he promised included changing the education system to help young people into work, building more council homes, and honouring commitments to fund defence while sticking to the UK’s spending and debt rules.

One of Burnham’s poignant tasks is to instruct Whitehall officials on what to do if the country comes under nuclear attack and the government is incapacitated. That is one reason for the resignation last month of John Healey, the defence secretary, who thought the proposed defence investment plan was inadequate to meet the threats and the loose commitment to spend 3.5% of GDP on defence by 2035.

Finally, let us wish Burnham success as he embarks on the challenging journey of restoring stability and prosperity to his country’s struggling economy.

The post Needed: A fundamental transformation in Labour politics first appeared on The Malta Business Weekly.

There’s a popular narrative that the country doesn’t need the real estate sector. It’s not the engine of the economy, but it’s one of its lubricants. We hold our breath and recall salient electoral pledges sung by Labour influencers in the lead-up to the party’s unprecedented fourth consecutive victory. Among the many pledges made were:

• The €1,000 annual “super bonus” for workers (minimum €500 for part-timers); next, more family/parental support, such as extending maternity leave to 26 weeks; introducing six months of government-paid parental leave (shared); additional paid leave for new parents; and a €5,000 birth bonus per child.
• More exciting freebies include extended housing help – the “My First Home” scheme: an interest-free government loan of up to 25% of the property value for first-time buyers. Added to these incentives were a range of youth-focused measures, including a commitment to exempt the first €30,000 of income from tax for three years for young people entering the workforce or starting a business. An even bigger incentive was reserved for pensioners, who were promised a €50 weekly increase over five years, on top of COLA adjustments.
• The Chamber of Commerce applauded promises for their members, such as €250 million for economic shocks; a target of 4% annual GDP growth; keeping the deficit under 3%; and more high-quality jobs. Nothing pleases the sans-culottes more than the promise to freeze construction during appeals; revise local plans; build two Gozo Channel boats; and protect green spaces (for example, Manoel Island and White Rocks as national parks).

Some pledges are expensive or complex (for example, major infrastructure, large pension increases, extensive school modernisations) and may face delivery challenges. The government is likely to prioritise the most visible ones (bonuses, family benefits, first-time buyer help) early on, but full delivery on the broader manifesto will depend on economic conditions and execution – areas where previous Labour governments have shown both strengths and delays.

The Central Bank has taken a bullish stance towards Malta’s economy, revising its GDP growth forecasts upwards and saying overall risks to economic growth in 2026 are tilted to the upside. It expects Malta’s economic growth to be largely fuelled by an increase in domestic demand and a gradual recovery in private investment. Net exports will also contribute to growth, though less than domestic demand.

Inflation risks are also slightly tilted to the upside, the Central Bank said: geopolitical and global trade issues could all create supply-side bottlenecks that fuel inflation; wage pressures could be stronger than expected; and unfavourable weather conditions, as well as some policies supporting the green transition, could also push up inflation.

Growth is projected at 3.7% in 2026, 3.6% in 2027, and around 3.8% in 2028 (Central Bank). The IMF expects Malta to lead Europe with ~4% average annual growth through 2031. All the while, there is a healthy prognosis that we did exceed EU economic targets, with GDP growth reaching 4.9% at constant prices in 2024.

One congratulates Clyde Caruana, Finance Minister, as a dignified economist announcing a generous budget for 2026 which, inter alia, aims to help a low-income stratum of society, nurture young families, and lift up pensioners’ lot in fighting the cost of living. In his budget speech, he stressed that Malta’s economy aims for its next leap forward in terms of quality, to start producing more clean energy by harnessing natural resources like wind and solar power.

Many sustain a common perception that commercial banks are brimming with idle cash yet, as a general rule, give a hard time when approached to lend depositors’ money. This is true, however, as a result of Malta’s FATF grey-listing in 2021; banks had taken a cautionary approach and decreased their risk appetite, particularly in areas where they lacked sufficient knowledge of proposed business lines or activities. Malta’s swift removal from the Grey List in 2022 has since leveraged expectations that banks return to their previous stance and become more approachable.

Moving on, one notes with satisfaction a projected compilation by foreign experts of a Malta Vision 2050. Naturally, no discussion is complete without mentioning the exemplary tourism revival since the two ugly years of the pandemic.

On a sore note, we cannot omit to mention a drawback in our educational system, with only one in five students passing Matsec exams. Realistically, given the millions invested in education, the dismal maintenance of a low scholastic level each year carries deep economic and social implications for Malta’s both present and future AI digital industry.

In summary, many hope that 2026 will augur well for our leaders to stand tall, forget the political divide, and try to boost exports by lifting their heads above the parapet.

The post Middle East burns yet Malta’s prospects are bright first appeared on The Malta Business Weekly.

There was a time when the financial services industry changed slowly. Banks looked like banks. Insurers looked and acted like insurers. Competitors were traditionally familiar names playing by familiar rules.

That world has moved on. A bank or insurer today may find its keenest competitive threat comes not from a traditional rival, but from a technology firm people deal with every day, or from a fintech challenger.

The question facing financial services businesses everywhere is deceptively simple: how do we stay relevant? It’s a question posed in boardrooms the world over – and Malta is no exception.

Financial services have been one of the island’s economic successes. Over three decades it has built an internationally-recognised industry spanning banking, insurance, investment services, wealth management, payments, fintech and professional services – a sector that today accounts for 7% of Malta’s Gross Value Added and around 6% of the country’s workforce, according to recent figures from the Malta Financial Services Authority (MFSA) and industry bodies such as FinanceMalta.

But thriving industries and businesses rarely have the luxury of standing still.

Successful digital challengers such as Revolut have shown how quickly customer expectations shift – accounts opened in minutes, instant payments, simple apps on people’s phones, a more customer-friendly approach – these have reset what people expect from a financial services institution, even as many continue to navigate the challenges that come with rapid growth and increasing regulatory scrutiny.

The lesson isn’t that every bank or insurer should turn itself into a technology company. It’s that every institution needs to properly understand what its customers truly value. Trust and security remain non-negotiable, but customers now also expect services to be fast, simple, and intuitive.

Established firms carry the weight of legacy systems, regulation, and complex operating models. New entrants can move faster but face the harder task of scaling safely and building a customer base, often at vast expense. Success will go to those who strike the balance: innovative yet disciplined, agile but resilient, customer-focused with robust controls.

As a board director in financial services, one of the more striking changes I’ve seen over recent years, is how the risk landscape has grown more complicated. Operational resilience is now a boardroom issue. Businesses depend on technology providers, outsourced partners, cloud infrastructure, and increasingly intricate supply chains – and a problem outside the organisation can quickly become a problem inside it, as we saw with the cyberattack on Jaguar Land Rover in the UK. The Cyber Monitoring Centre estimated that the attack cost the UK economy £1.9 billion (€2.2 billion), describing it as one of the most damaging cyber events in the country’s history; more than 5,000 businesses in JLR’s supply chain were affected, with production halted for weeks and the ripple effects lasting considerably longer.

The relevance for financial services’ companies is clear: today’s risks rarely stay neatly contained within company boundaries or traditional sector definitions. Businesses need a clear picture of not just their own operations, but the wider ecosystem they sit within.

Customer data poses a similar challenge. Financial institutions hold vast quantities of sensitive information. Used well, it improves services, helps prevent fraud, and creates better customer experiences. But systemic weaknesses will be exposed and exploited, damaging, possibly irreparably, the one asset a financial business can’t do without: trust. Reputational harm, regulatory censure, fines, and lost business follow close behind.

One risk gaining ground is “shadow AI”, where employees paste sensitive client data or code into unapproved, publicly available AI tools, creating an immediate and often invisible data leak. Clear AI governance, employee training, and appropriate controls, are now essential parts of good risk management.

This is why good governance matters. The best firms build cultures where innovation is encouraged but challenge is welcomed too – where ambitions for growth are matched by investment in controls, people, and systems.

For Malta, these questions carry weight. Smaller financial centres have real advantages: they can be entrepreneurial, responsive, and closely connected, with regulators, businesses, and policymakers able to work together and respond to issues more easily than in larger markets. But international credibility rests on keeping standards. The MFSA’s 2025 Annual Report, published earlier this month, gives some sense of the scale of supervision now under way: 1,849 supervisory interactions with authorised entities over the year, 1,023 new authorisations approved, and €570,673 in penalties imposed. Consumer protection, sustainability, cyber resilience, and operational efficiency all feature as continuing priorities, alongside developments across banking, insurance, capital markets and crypto-assets, as European and global standards keep evolving. Sustained attention to anti-money laundering, financial crime prevention and effective regulatory oversight will remain essential to that credibility.

The strongest financial centres have come to recognise that effective regulation is not the opposite of competitiveness – it’s part of what makes a jurisdiction attractive.

EU membership is central to Malta’s competitiveness. A single MFSA licence allows a Maltese-based financial company to “passport” its services across the entire EU and EEA market of some 450 million consumers, under frameworks such as MiFID II, Solvency II and PSD2 – and, for crypto-asset firms, the newly harmonised MiCA regime – reducing the need for separate authorisations across individual markets.

But membership cuts both ways. Malta must match the standards of other member states, consistently. Firms are working through the operational requirements of the EU’s Digital Operational Resilience Act (DORA), and crypto businesses face this year’s deadline to convert from Malta’s earlier national licensing regime to full MiCA authorisation. Effective passporting depends on strong trust between regulators, particularly as other EU supervisors rely on Malta’s oversight as well as their own. Moreover, Malta isn’t the only small EU domicile offering this access – Ireland, Luxembourg, Cyprus and Lithuania are competing for much of the same business – so Malta’s advantage will need to be earned through speed, transparency and sustainability, not through the licence alone.

So, what might the next decade look like?

The successful financial services businesses of the future may not simply be those with the greatest scale or the newest technology. They’re more likely to be those with the ability to continually reinvent themselves – organisations that adapt to customers’ needs, use technology intelligently and safely, attract the best talent, and maintain the discipline and resilience on which trust depends.

For Malta, the opportunity is significant. The island has already proved that a small jurisdiction can build a financial services industry with international relevance. The next challenge is moving from growth to sustained excellence.

Financial organisations that succeed won’t be those that choose between innovation and regulation, speed and security, ambition, and responsibility. They’ll be those that understand these qualities must exist together – and that agility only creates lasting value when combined with world-class standards, strong governance, and a relentless focus on good customer outcomes.

MFSA’s CEO, Kenneth Farrugia, recently stated that the authority’s focus remains on “building trust, strengthening resilience and shaping the future of Malta’s financial services industry”.

It’s a fitting ambition – not only for Malta’s regulator, but for every Maltese financial services business preparing for the future.

After three decades of growth, Malta’s financial services industry has earned its place on the international stage. Its next chapter will be defined not by protecting what has already been built, but by having the confidence to challenge it.

Maria Darby-Walker, non-executive director, Visiting Fellow at

Oxford University and Business mentor

The post Beyond growth: The next test for Malta’s financial services industry first appeared on The Malta Business Weekly.

However, beneath the surface of this consumer boom lies an unstable foundation. An analysis of official population data from 2023 through 2025 reveals a structural shift: Malta’s domestic labour supply is contracting, leaving the economy heavily reliant on an exponential influx of foreign workers. Moreover, the present economic growth model is facing diminishing returns, marked by a stagnation in post-pandemic labour productivity. As the country hits physical and infrastructural capacity limits, the negative externalities – ranging from gridlock traffic to severe environmental and noise pollution – are forcing a reassessment of what constitutes a successful economic growth model.

By mapping these changes onto Maslow’s Hierarchy of Needs, it becomes clear that an economic strategy, built solely on boosting transactional spending power, is encountering a hard psychological and sociological boundary. As citizens attain material affluence, their priorities naturally pivot toward qualitative, higher-order needs: time, wellness, and environmental peace.

The composition of Malta’s population growth reveals that the domestic Malta native engine of the workforce has nearly shut down. A year-on-year analysis, as per below, from the official population statistics, establishes a clear trend line:

*Note: The breakdown by broad citizenship was introduced in the 2024 reporting cycle.

The critical takeaway from this demographic data is the near-total collapse of natural population growth. In a nation of over half a million people, the natural increase in 2025 was just 98 individuals. Every ounce of economic expansion is being fuelled by labour importation. By the end of 2025, non-Maltese citizens comprised nearly one-third (31.06%) of the entire resident population.

Historically, importing labour is a viable short-term strategy to cope with rapid economic expansion. However, Malta’s post-pandemic model has relied on adding headcount rather than multiplying value.

Data clearly indicates that Malta’s post-pandemic labour productivity trajectory has flattened, and in certain labour-intensive sectors, actually declined. When economic growth is achieved purely by importing more people to do low-value or low-digitised tasks (for example: manual logistics, traditional hospitality, basic construction), Gross Domestic Product (GDP) grows horizontally rather than vertically.

This horizontal growth model creates a vicious cycle:

• Low productivity requires more workers to maintain output;
• More workers expand the total population, requiring more infrastructure;
• Expanded infrastructure requires further low-skilled labour to build and maintain, depressing the national productivity average even lower.

With a high worker turnover rate – evidenced by the 12,062 third country nationals who emigrated out of Malta in 2025 alone – businesses face continuous onboarding and training costs, preventing the accumulation of institutional knowledge and technical competency.

While government intervention via handouts, subsidies, and tax cuts has successfully sustained baseline financial liquidity, it has directly contributed to degrading the physical environment. The addition of roughly 46,000 net residents in a brief 36-month window has pushed much of the island’s infrastructure to its physical limits. For residents, everyday life is marked by traffic congestion, persistent construction noise, visual and environmental pollution, and a severe deficit of tranquil green spaces.

This tension can be decoded using Maslow’s Hierarchy of Needs. When a society is struggling economically, government policy that maximises disposable income addresses fundamental Physiological and Safety Needs. Handouts and subsidies act as a safety net, ensuring people can afford energy, groceries, and basic comforts.

However, once these transactional, material needs are consistently met – as they have been by Malta’s high-employment, subsidy-backed economy – citizens naturally ascend Maslow’s pyramid. Their focus shifts to higher-order requirements: Safety and well-being (breathing clean air, enjoying quiet environments, stress-free commuting) and Time (spending fewer hours stuck in gridlock and more time on leisure or with family).

The paradox of the current Maltese model is that the very mechanism used to elevate citizens’ financial standing actively destroys the environment required to fulfill their higher-order needs. A citizen with an additional €100 of disposable income cannot use that money to purchase clean air, buy their way out of a one-hour traffic jam on the standard commuter routes, or escape the pervasive noise of an over-developed neighbourhood.

In my humble opinion, any political or commercial strategy built on the assumption that boosting spending power will permanently secure majority public support is operating on a flawed, short-term premise. Transactional politics works only when a population is trapped at the base of Maslow’s hierarchy.

As Malta’s population crosses the threshold where more than 31% of the country is foreign-born in order to sustain this economic model, the collective focus will likely be shifting, whereby the primary grievance of the Maltese public will no longer be lack of spending power, but a systematic erosion of their quality of life.

In conclusion, I strongly believe the country faces a mandate to restructure its economy around vertical growth. For both public policy and private businesses, the ultimate priority must be to digitalise operations and aggressively increase labour productivity. Instead of hiring five additional workers to handle manual administrative workflows, retail and services must invest in AI, automation, and advanced software architecture. Instead of relying on foreign labour to mask operational inefficiencies, businesses must upskill their existing workforce, offering higher wages for technologically augmented roles based on re-engineered processes. This also holds for the public sector.

Only by generating more economic value per capita can Malta sustain its economic health while reducing the physical footprint of its workforce. Boosting spending power is a short-term strategy that has run its course; the future belongs to sustainable, high-productivity models that protect the very environment in which people live and spend their time.

The post The limits of a transactional economy first appeared on The Malta Business Weekly.