Backed by a Brussels-approved economic strategy and an injection of public funds that has seen government equity swell to €350 million, the airline was supposed to represent a new era of fiscal responsibility in local aviation. Yet, as the months tick by with zero transparency, the business community and the taxpaying public are left asking an uncomfortable question: are we witnessing the slow-motion prologue to another Air Malta disaster?

The core of the issue lies in a deafening silence from both the airline and the administration. To date, KM Malta Airlines has not filed a single set of audited accounts with the Malta Business Registry. Vague assurances from Finance Minister Clyde Caruana regarding filing extensions ring hollow when deadlines continuously pass unfulfilled. When inquiries from the press are met with stonewalling, it invites the worst kind of speculation. In the absence of audited figures, observers naturally assume the worst, with rumours swirling that the carrier is losing money.

This is not merely a matter of administrative bureaucracy; it is a fundamental breach of public trust. Taxpayers are involuntary shareholders in this enterprise, having contributed hundreds of millions in hard-earned capital. They are not asking for trade secrets; they are demanding the basic right to know whether public funds are being stewarded responsibly and whether the airline is adhering to the viability plan promised to Europe.

Transparency does not undermine a national airline; rather, opacity is what ultimately destroys it. Shrouding the company’s financial health in secrecy only serves to erode confidence among business partners, passengers, and staff who deserve stability, not a repeat of past failures.

The Nationalist Party has rightly ratcheted up pressure on the government, emphasising that accountability is non-negotiable where public money is concerned. Good governance requires that those entrusted with taxpayer funds answer for how those resources are utilised. If KM Malta Airlines is performing well and meeting its targets, the administration should be eager to publish the numbers and reassure the public. If it is struggling, hiding the truth will not make the losses disappear – it will only delay the inevitable reckoning until the damage is far harder to repair.

Malta cannot afford another aviation debacle. The government and the airline’s leadership must drop the defensive posture and come clean immediately. By publishing the outstanding accounts and detailing a clear financial outlook, they can (hopefully) dispel the rumours and chart a credible path forward.

Anything less is a disservice to the Maltese public and another severe blow to the principles of transparency and good governance.

The post EDITORIAL: Opening the books – Will KM Malta Airlines avoid Air Malta’s fate? first appeared on The Malta Business Weekly.

Over the past decade, Malta’s fiscal trajectory has transitioned through several distinct phases. In the pre-pandemic period between 2016 and 2019, the general government maintained fiscal surpluses, reducing the debt-to-GDP ratio to 43.1% and creating sufficient fiscal space. This shifted abruptly in 2020 when the onset of Covid-19 necessitated massive expansionary support packages and created large primary deficits. The subsequent recovery between 2021 and 2023 saw fluctuating fiscal stances as pandemic aid was replaced by extensive energy subsidies to shield the economy from international price shocks. By 2024 and 2025, the government re-embarked on discretionary fiscal consolidation, unwinding major one-off support measures and steering the headline balance toward sustainable benchmarks.

On the positive side, Malta achieved a milestone in 2025 as the general government deficit narrowed to 2.2% of GDP from 3.4% in 2024, falling below the EU’s 3% Maastricht threshold for the first time since the pandemic. This consolidation prompted the European Council to formally close the Excessive Deficit Procedure against Malta in June. Overall revenue expanded by 9.4% in level terms to reach 34.8% of GDP, bolstered by strong corporate tax collection, sustained wage and employment growth that lifted household income taxes to 7.6% of GDP, and a tourism-driven rebound in value-added tax receipts. Furthermore, Malta’s debt-to-GDP ratio closed at 46.4%, standing substantially below the euro area average of 87.4%.

Despite these positive headline figures, this CBM report highlights several significant structural and medium-term fiscal risks that demand closer scrutiny. A primary vulnerability lies in the composition of government revenue, which has become increasingly dependent on direct corporate taxation. Corporate tax receipts reached an all-time high of 7.1% of GDP in 2025, driven largely by foreign-owned firms operating under specialised refund and group consolidation frameworks, alongside incentives connected to the EU Pillar 2 minimum effective tax rate. This leaves public finances exposed to shifts in international tax environments, multinational restructuring, or cross-border regulatory changes. This concentration risk is compounded by the permanent loss of revenues from the citizenship-by-investment scheme, which was terminated following an adverse European Court of Justice ruling in April 2025. Meanwhile, indirect taxes and social contributions remain structurally subdued relative to their historical pre-pandemic shares in output.

A deeper risk stems from the rigidity and momentum of public expenditure, which reached 37% of GDP in 2025. Recurrent spending remains elevated due to the 2025 civil service collective agreement, higher outlays on contractual services and residential care that pushed intermediate consumption to 8.1% of GDP, and accelerating pension commitments driven by an aging demographic. In addition, permanent energy subsidies continue to consume 2.2% of GDP – double their pre-pandemic baseline – creating a recurring fiscal burden. The report also points out that while annual expenditure growth in 2025 aligned with national targets, cumulative net expenditure growth continues to exceed the benchmark path set under the EU’s revised fiscal framework.

Finally, the favourable snowball effect, which historically offset borrowing costs through rapid nominal GDP growth, has started to weaken as economic expansion normalises and effective sovereign financing rates edge higher, leaving the fiscal balance vulnerable to future macroeconomic shocks.

The macroeconomic projections detailed in the Central Bank of Malta’s Outlook for the Maltese Economy (2026:3) establish direct structural and cyclical links with the previously mentioned fiscal review, Fiscal Developments in 2025. Together, the two documents provide an interconnected narrative of Malta’s transition from post-pandemic recovery to mapping out the shared drivers of growth and persistent downside risks.

On the positive side, the macroeconomic outlook reinforces the ongoing consolidation trajectory outlined in the 2025 outturn. Real GDP growth is projected to remain robust at 3.8% in 2026, 3.6% in 2027, and 3.8% in 2028, largely anchored by resilient domestic demand and private consumption, which accelerates to 4.3% in 2026. This underlying economic strength continues to feed directly into public revenue. The widening of income tax brackets and continued employment growth, which increased direct household taxes in 2025, are expected to support household disposable income and consumer spending through 2028. Consequently, the general government deficit is projected to narrow progressively from 2.2% of GDP in 2025 to 1.9% in 2026, 1.7% in 2027, and 1.6% by 2028, ensuring Malta remains safely below the 3% EU threshold. In parallel, the structural deficit is forecast to improve to 1.9% of GDP, while the debt-to-GDP ratio extends its downward trajectory to 44.2% by 2028, well beneath the euro area benchmark.

However, both of the mentioned CBM reports bring into sharp focus the common structural vulnerabilities and heightened risks facing the economy. A prominent link is the fiscal burden of energy policy. While the 2025 review noted that energy subsidies had locked in an expenditure floor at 2.2% of GDP – double pre-pandemic levels – the 2026 outlook reveals that these outlays will likely rise during the year due to renewed commodity price shocks following geopolitical conflict in the Middle East and the war in Iran. Because the government maintains fixed retail energy tariffs, any escalation in global fuel import prices passes straight through to public expenditure rather than consumer prices, presenting a direct downside risk of budget overruns.

Both reports also mention the downside in public expenditure rigidities and the public investment cycle. The 2025 outturn identified persistent upward momentum in intermediate consumption and public sector wages following the new civil service collective agreement. The 2026 outlook confirms that real government consumption will continue expanding by over 3% annually across the forecast horizon due to these same binding wage agreements and operational costs. On the capital side, the planned deficit reduction depends largely on a decline in government investment after 2026, following the completion of major Recovery and Resilience Facility (RRF) projects and the second electricity interconnector. This creates a sharp drop in capital expenditure from a 17% surge in 2026 to near stagnation by 2028, leaving fiscal targets exposed should project timelines slip or capital transfers re-emerge. Forecasting capital expenditure stagnation creates a severe disconnect between fiscal modelling and physical reality, as suppressing public investment directly clashes with the urgent need to address Malta’s mounting infrastructure bottlenecks. Relying on capital cutbacks as the primary mechanism for deficit reduction risks forcing sudden, unbudgeted emergency spending later to prevent infrastructure failures, which could ultimately derail the government’s medium-term consolidation targets.

Finally, revenue sustainability and macroeconomic imbalances intersect across both reports. As the 2025 review cautioned against an over-reliance on volatile corporate direct taxes, the 2026 outlook expects tax growth to track just at or below nominal GDP expansion. At the same time, employment growth is projected to moderate toward 2.3% as foreign worker inflows decelerate due to new migration policies, which may dampen future social contribution growth and compound demographic pressures on pension outlays. Coupled with upside risks to headline inflation from global supply disruptions and persistent services costs, these fiscal and macroeconomic interlinkages underline that Malta’s fiscal consolidation path remains highly sensitive to external shocks and rigid domestic spending commitments.

The post Malta’s fiscal consolidation: Headline gains masking structural vulnerabilities and expenditure risks first appeared on The Malta Business Weekly.

At the heart of the conflict are sharply contrasting legal arguments.

Malta’s government and regulator argue that Bill 55 simply reaffirmed existing public-policy exceptions under EU law, without creating new grounds to reject judgments or imposing a blanket ban on enforcement. They say the law codifies Malta’s “long-standing public policy on online gaming” and reflects the limited ordre public exception already in the Brussels I Recast Regulation. In their view, unfair foreign judgments, which are often based on protectionist local monopoly laws, should not upset Malta’s regulated market.

By contrast, the European Commission and critics view Bill 55 as a protectionist loophole that breaks fundamental EU principles. By allowing Malta to flatly refuse to enforce rival EU court orders, Brussels says it violates the requirement that Member States mutually recognize judicial decisions. In this view, Bill 55 provides Malta with an open-ended shield, as it obliges Maltese judges to dismiss any claim against an operator licensed in Malta. Such wholesale non-enforcement goes beyond the narrow “public policy” ground usually allowed; the Commission argues and thus undermines mutual trust in the EU legal order.

The Austrian side, and by extension, Germany, adds further tension. Austria maintains a strict state gambling monopoly, with its courts treating any unlicensed play as illegal. From Austria’s perspective, Maltese licensees were acting unlawfully under Austrian law. As Malta’s courts have refused to honour Austrian rulings, Austria’s judicial response has been to find ways around Malta’s law, for example, by ordering Austrian banks to pay out or by invoking rarely used legal provisions to keep judgments alive.

Over the past year, three significant proceedings before the CJEU have further shaped the legal landscape.

In Wunner (Case C‑77/24, Jan 2026) the CJEU held that in damages claims for illegal gambling, the “place of damage” is the gambler’s habitual residence. Concretely, an Austrian who lost money betting on a Malta-licensed site had his losses deemed to occur in Austria, meaning Austrian law applied. The Malta Gaming Authority noted this ruling was “definitely impactful” but “neither groundbreaking nor unexpected,” confirming that local laws often govern such claims, though Malta’s legal defences remain intact.

In April 2026 the CJEU’s Advocate General Nicholas Emiliou issued an opinion in Spielerschutz Sigma (C‑683/24). He found the Austrian court’s preliminary reference technically inadmissible but nonetheless opined that Article 56A would be “manifestly incompatible” with EU rules on recognition and enforcement. Emiliou warned that Bill 55 appears designed primarily to protect Malta’s gaming industry, an “essential” sector, and that economic interests alone cannot justify overriding EU freedoms. He stressed that foreign judgments against Maltese operators must, in principle, be recognised and enforced in all Member States. While AG opinions are non-binding, this was a clear signal that Malta’s statute is on shaky ground under Brussels I bis.

Then, on 21 May 2026, the CJEU delivered its judgment in Mr Green (C‑198/24). In that cross-border debt case, an Austrian player had obtained a judgment ordering Malta-licensed Mr Green Limited to repay €62,878 and sought a European Account Preservation Order (EAPO) to freeze the operator’s assets abroad. The question was whether laws like Malta’s Bill 55 count as a risk factor for asset dissipation. The Court answered in the affirmative, holding that a court issuing an EAPO may take into account the existence, in the Member State where the debtor is established, of a law capable of impeding enforcement of the claim. In other words, Article 56A itself may justify urgent asset-freezing, by evidencing that the debtor might evade payment. As one commentator noted, the very existence of Malta’s law can now weigh in favour of granting cross-border freezing relief.

Taken together, these rulings and opinions have sharpened the legal stakes. The AG’s advice and the Mr Green judgment both suggest that Malta’s carve-out for gaming licenses could backfire, by encouraging creditors to bypass local courts entirely. Maltese operators now face possible EAPOs on foreign accounts and a legal precedent (Wunner) that many refund claims can proceed under other Member States’ laws. These developments place additional pressure on Malta’s “point of supply” licensing model, which assumes a Maltese licence allows cross-border operations.

The post Gaming industry under growing EU pressure first appeared on The Malta Business Weekly.

In the economic analysis introducing the pre-election proposals document titled Lead (Leverage, Excellence, Agility, and Delivery) – The Malta Chamber’s Proposals for 2026-2031 Legislature, the Malta Chamber presented a stark empirical analysis of the factors driving Malta’s economic growth in recent years. Analysing the period between 2013 and 2023, the analysis revealed that while Malta’s Gross Value Added (GVA) expanded by more than 80%, approximately 70% of that aggregate economic growth was driven purely by population growth and an expanding workforce (increased labour input). In contrast, a paltry 3% of that growth resulted from improvements in labour productivity. The Chamber’s figures demonstrate that Malta’s economic model relied almost entirely on sheer volume – bringing in more foreign labour, attracting more population, driving more transactions, and building more units – rather than generating higher output per worker.

Our growth pains are linked directly not merely to economic growth itself, but to our economic growth model, that is, how we chose to grow our economy. We chose to grow our economy at breakneck speed by failing to carefully calibrate the mix of economic growth sectors between highly productive sectors and low-productivity, labour-intensive sectors. We consistently chose volume growth over value.

This structural flaw was further elaborated in PwC Malta’s Economic Outlook, which highlighted a pronounced slowdown in national productivity. The PwC analysis demonstrated that while top-line GDP and GVA expanded, value-added per worker stagnated because national expansion was concentrated in low-productivity, labour-heavy industries, while higher value-added, highly productive sectors experienced deceleration. By relying on headcount to generate economic momentum, the national economy expanded through spatial and demographic pressure rather than structural efficiency.

The operational outcome of adopting this mindset from a volume-driven economic growth model is now explicitly outlined in the Central Bank of Malta’s Business Dialogue report (2026 Vol. 6 No. 3). The report demonstrates how this model is resulting in a sharp disconnect between turnover growth and actual profit growth across local businesses. While top-line activity appears buoyant – with a net balance of 41% of firms reporting positive current conditions and 49% anticipating further short-term improvements – businesses are suffering from systemic margin erosion. A staggering net share of 86% of surveyed firms reported surging input costs driven by supply chains, freight, and raw materials, yet only 51% were able to raise their selling prices due to market competition and contractual constraints.

Consequently, nearly 39% of businesses recorded a direct contraction in their profit mark-ups. Enterprises are processing higher revenues and managing higher transaction volumes, yet keeping less of the bottom line. Moreover, with labour availability remaining the primary operational bottleneck across 35% of all firms (and over 40% in services and construction), 64% of firms report wage increases between 2.1% and 6% simply to retain headcount, further compounding cost pressures on businesses that rely on labour-intensive operations.

These survey results directly illustrate the structural limitations of a volume-based economic growth model. When national growth is built on expanding physical volume and labour headcount rather than driving output per worker, businesses hit an operational wall. Scaling up transactions in a volume-driven framework inevitably leads to diminishing returns, as acute labour shortages, wage inflation, severe infrastructure bottlenecks, and unmanageable input costs eat away at enterprise profitability. The CBM data proves that high turnover under a volume model provides an illusion of prosperity while accelerating margin squeeze, demonstrating that endless headcount expansion cannot substitute for real productivity growth.

Rather than consoling ourselves by saying that these difficulties are just growth pains, we must focus on the way forward to fundamentally transform our economic growth model. Pivoting away from a volume-based framework toward a value-driven economy directly aligns with the long-term objectives of Malta Vision 2050 and the foundational metrics of any holistic national well-being index, both of which prioritise quality of life, environmental sustainability, and high-value economic efficiency over raw demographic expansion.

To execute this transition effectively, future government strategy must ensure that all cash and fiscal incentives are directed entirely toward higher productivity and redirected away from labour-intensive sectors. Public support, tax credits, and financial grants should no longer incentivise business models that depend on low-wage, high-volume employment. Furthermore, such fiscal incentives must incorporate explicit, mandatory metrics defining exactly how productivity will be measured such as Gross Value Added generated per employee, technological automation rates, or energy efficiency gains, to guarantee that public funds deliver verified economic returns.

Ultimately, hours lost sitting in gridlocked traffic or dealing with a crumbling infrastructure are not growth pains. They are systematic weaknesses that, among other policy decisions, need to be directly addressed by a decisive shift in our economic growth model.

The post Growth pains first appeared on The Malta Business Weekly.

Additionally, based on reader feedback, I will begin using subtitles to improve article clarity.

Age-restricted short lets and residential quality of life

Tourism is a relevant example. It is positive that tourists enjoy Malta’s attractions and that locals benefit from short-term rentals. However, our priority should be quality growth in tourism, rather than simply increasing visitor numbers. Excessive short-term rentals in residential areas are diminishing residents’ quality of life. While I support individuals earning income from short-term lets, property owners must ensure they do not disturb their neighbours. It is unacceptable to profit by permitting disruptive groups, such as rowdy teenagers, to compromise the peace of residents who have invested in their homes.

To address issues in busy areas, one solution is to restrict short-term rentals based on age. For instance, regular bookings could be prohibited for groups with an average age below 23 or 25. Authorities and rental platforms are aware of which age groups tend to cause disturbances. Private short-term rentals in these hotspots should be restricted for groups under 23 or 25, with exceptions for verified families, business travellers, licensed hotels or hostels, and longer stays. Long-term students under the age threshold would be considered separately. Platforms should require identity verification at booking and check-in, block non-compliant bookings, and display license numbers. Young tourists would still have access to hotels, which provide their own security away from residential blocks.

Furthermore, trained civilian teams are needed to address noise complaints, antisocial behaviour, and waste issues in busy neighbourhoods, and to issue prompt penalties when necessary. These teams should collaborate with the police, local councils, and rental platforms, and be funded through special levies in affected areas. Public reporting and robust oversight are essential. The Malta Tourism Authority has established occupancy rules, including lower limits in residential zones. We should also consider mandatory quiet hours and update existing regulations. While some residents have suggested military involvement out of frustration, it is important to maintain a clear distinction between military and civilian responsibilities.

Polluter Pays Principle for noise pollution

Pollution extends beyond the environment; noise pollution is a significant concern. The Polluter Pays Principle should be applied to noise in residential areas, recognising it as a genuine social harm and making it a priority. Excessive noise in densely-populated neighbourhoods with many short-term rentals should be treated as an environmental issue with tangible social costs. Efforts should begin in high-tourism areas such as Swieqi and surrounding zones. Other countries use sound sensors on streets and buildings to monitor noise during nights and weekends. Although these are not airport zones, a minimum decibel standard should be established to ensure residents’ peace. We should pilot sensor based thresholds and adopt a provisional residential night time decibel standard, to be refined after pilot results. While the government has previously increased revenue through economic growth rather than new taxes, it is now necessary to consider the polluter-pays principle. High-risk areas should impose additional noise charges on frequent short-term rentals and the platforms that facilitate them. Funds collected should support soundproofing grants, improved sanitation, and enforcement teams.

Tax policy can influence outcomes. Establishing special zones and implementing higher short stay surcharges in high-risk areas, particularly in the ninth and tenth districts, would support these neighbourhoods. Revenue should be allocated to neighbourhood improvements, soundproofing, community services, waste management, and security. Oversight should occur at the EU level, as platforms often disregard local data requests. Platforms must be required to remit payments, report transparently, and face penalties for non-compliance. A transition period until 2029 is recommended: the first year for mapping and registration, the next two years for sensor testing and age rule enforcement, and by the third year, full implementation of hotspot taxes and removal of non-compliant listings if necessary. Exemptions should apply to long-term stays, workers, families, and students, with additional support for residents such as soundproofing grants and accessible complaint processes.

Quality growth and sectoral priorities

When discussing growth, it is important to understand the key measures and principles of economic development and their broad application. Our current focus should be on quality growth, which involves evaluating each sector individually. Malta, for example, can prioritise its top 60 main sectors, ranging from services to manufacturing. Authorities must determine which sectors to prioritise for future support. I am not suggesting we close any industries but rather pause expansion in sectors that do not deliver high-quality growth and concentrate on those that achieve better outcomes with fewer resources. As reiterated last week, when discussing growth, it is important to understand the main measures and principles of economic development and their global application. Credit rating agencies and the European Commission primarily use debt-to-GDP and deficit-to-GDP ratios.

Lastly, if we want to be serious, noise pollution in crowded residential streets must be addressed as both an environmental and social issue. People are not against such measures. Certainly, people want us to measure, charge for, and enforce noise regulations, as well as implement age-based booking limits, apply hotspot taxes, and ensure dedicated enforcement. Residents in these areas are requesting these changes to protect their communities and promote higher-quality tourism.

The post Making noise polluters pay for quality tourism growth first appeared on The Malta Business Weekly.

Malta’s logistics operators and consumers are already experiencing the economic impact of the European Union’s Emissions Trading System (ETS). The result is straightforward: higher transport costs that ultimately increase the price of almost everything imported into Malta. By 2028, a second carbon pricing mechanism, ETS2, will add further pressure, risking the affordability of Malta’s essential connectivity with Europe.

The results of this new regulation, over and above ETS, carry the very serious risk of Malta’s connectivity to Europe, our lifeline, becoming unaffordable.

No one disputes the importance of Europe’s transition to a lower-carbon future. Reducing emissions and promoting more sustainable transport are necessary objectives. However, climate policy must recognise that not all member states face the same realities. For Malta, geography is not a minor consideration but a permanent economic constraint.

As an island nation state, Malta depends entirely on reliable sea links to mainland Europe. Every day, food, medicines, construction materials, industrial supplies and consumer goods arrive through these maritime connections. Unlike continental countries, Malta has no road or rail alternatives. Sea transport is not a choice; it is our economic lifeline.

Before introducing another major carbon pricing mechanism through ETS2, the European Union must fully acknowledge the pressures Malta’s international transport sector is already facing.

Maltese international trailer operators have no option but to rely on maritime services to reach European markets. A typical return journey between Malta and Genoa covers around 1,400 nautical miles, creating a structural disadvantage that mainland competitors do not face. Yet these operators sustain Malta’s connectivity by generating the freight volumes that support six weekly Ro-Ro services linking Malta with Europe.

The sector is already under considerable strain. Current ETS measures add approximately €1,000 to the cost of each round-trip trailer. These costs cannot simply be absorbed by operators and are ultimately passed on to Maltese businesses and consumers.

At the same time, operators purchase around 90% of their diesel in Europe, where prices average approximately €2.50 per litre. They also face rising port charges, terminal fees and road tolls across the continent. Together, these increasing costs are placing Malta’s transport sector under growing competitive pressure.

This is why European policy must reflect the realities of island member states. While mainland operators can benefit from road-only routes, rail alternatives and shorter supply chains, Malta has none of these advantages. A one-size-fits-all approach risks placing a disproportionate burden on economies that depend entirely on maritime connectivity.

The ongoing review of the EU ETS framework offers an opportunity to recognise these structural differences. Maltese transport operators are fundamentally different from their continental counterparts because their business model depends entirely on sea transport. Future legislation should reflect this reality.

The challenge will become even greater when ETS2 is introduced in 2028. Designed to extend carbon pricing to road transport and buildings, ETS2 aims to accelerate decarbonisation by increasing the cost of fossil fuels. While the objective is understandable, its impact on island economies requires careful consideration.

Current European assessments suggest ETS2 could increase diesel prices by around €0.13 per litre under moderate carbon price assumptions, with higher scenarios reaching between €0.30 and €0.50 per litre by 2030. For Maltese operators already paying around €2.50 per litre, this represents an additional increase of between 5% and 20%.

The consequences extend well beyond the transport sector. Higher freight costs inevitably explain the higher prices for essential goods, increasing costs for businesses and households alike. ETS2 therefore extends beyond the transport sector, becoming a broader issue with implications for national competitiveness, affordability, and economic resilience.

ATTO believes that sustainability and competitiveness must go hand in hand. Malta’s transport sector is committed to supporting Europe’s climate objectives, but operators need realistic pathways, targeted investment and policies that recognise the realities of operating from an island state.

If ETS-related revenues are collected, a meaningful share should be reinvested in practical decarbonisation measures, including cleaner vehicle technologies, alternative fuel infrastructure and financial support for operators modernising their fleets. The transition must be supported by investment, not regulation alone.

This is an issue that requires national unity. The government, the Opposition, relevant ministries, Malta’s members of the European Parliament and all stakeholders must work together to ensure Malta’s unique circumstances are recognised at European level.

The question is not whether Malta should participate in the green transition. It should and it will. The real question is whether Europe can achieve its climate ambitions while safeguarding the competitiveness of island economies, protecting the affordability of essential goods and preserving the connectivity on which Malta depends.

Climate action must remain ambitious, but it must also be practical, balanced and fair.

Joseph Bugeja is the chairman of ATTO

The post ETS and ETS 2 threatens to make Malta’s connectivity to Europe unaffordable first appeared on The Malta Business Weekly.

When one considers that the article is in English and that I am reaching these numbers during a period when most people are supposedly in holiday mode, it signifies something. This is the same pattern I observed before the general election when writing about current issues and humbly offering alternative solutions to deter and solve problems. People were closely following what I was writing. Something different was happening in the run-up to the general election. It is understandable to receive messages of encouragement from Labour supporters to submit my name for the general election with the PL. However, there were also PN supporters asking me to consider submitting my name for the general election with the PL. It is at times unexplainable and perplexing. But I got the gist of why. I did not just receive a few messages. Several persons even gave me their mobile numbers to keep in touch.

You might ask why I am writing this article, which might not have anything to do with the title. I will arrive at that point later. Besides the messages I receive on social media, I also engage with people in person – at village festas, community events, and even during home visits. The same pattern is emerging when people talk to me. Many tell me that they follow what I write, be it on social media or in the local newspapers, because I have kept consistent arguments over the past four years. One of them even told me that I am not a facsimile of others, and my brand is distinctive from the rest. The reason is that when I write about something, I criticise constructively in a way that does not harm anyone, and I humbly try to provide solutions. Perhaps this is why I was elected. People voted for me because they wanted consistency, as well as someone who doesn’t bend under pressure.

Now, when I speak about consistency, as you may all recall, I always reiterated that economic growth isn’t the problem. The problem, as it stems, is a planning and implementation problem. And this is not symptomatic of the PL government. It has always been, and it will take courage to change it, including bipartisan principles that should be inalienable, whoever is in government. Let’s take the environment. What we must do is keep more oversight so as not to allow chaotic conditions to thrive. Also, we have situations where we have more people on these islands not just permanently but also seasonally. Indeed, those who write about economic growth can’t understand the underlying positive effects. Alas, many of those writing and expressing their opinions are not economists.

An article written by a lawyer or a medical doctor doesn’t give the reasons why growth is bad. They argue that growth is not yielding the expected results. Firstly, we need to see what results they are talking about. Let me break this down. The starting point must be the understanding that the metrics provided universally, and those used by credit rating agencies as well as the European Commission, are the debt-to-GDP ratio and the deficit-to-GDP ratio. Indeed, there are other indices, but the starting point is economic growth. Because the lower the denominator, the bigger the ratio, and hence why we need economic growth.

Now, if economic growth means that we have additional tourists, additional seating capacities and services at our restaurants and hotels, and additional people living here to service our hospitals and medical care, then we need to manage the country with high precision, without hindering economic growth. And this means that whatever we do must be operationally efficient and implementable. At times, it must harshly punish those who are not complying with the current regulations to use it as a deterrent. We do not afford to relax, and we do not afford to start a political discourse that harms rather than helps facilitate our day-to-day work. Thumbs up to those involved in increasing the on-the-spot fines.

Also, we need to understand that people are indeed generating income. The only problem is that our political discourse has become one in which politicians either sweep issues under the carpet or avoid addressing them altogether for fear of stepping on others’ toes, and in the meantime, the Opposition fuels and foments a narrative that doesn’t paint the reality. We indeed have a situation where some areas need to be badly managed, with strict protocols. And here I must congratulate Minister Glenn Bedingfield for the good work he’s doing in several areas in Malta, including the increased surveillance in the ninth and 10th districts, which badly needed the on-the-spot fines and the suspension of accommodation licenses of those not complying with regulations and disturbing residential areas. Other districts are affected, too.

Certainly, economic growth is good as the country advances. Besides, we economists strive to distribute wealth more justly, and we also think of those who are really in need. What needs to be done is the right distribution of wealth, and this is a separate argument from economic growth, although intrinsically linked. And the problem we currently have is that some economic activities are indeed impinging on the quality of life of some residents, not least overdevelopment. I already stated this in a preceding article. I don’t understand the reason why piles of construction debris must sit next to an office and a residential area. Piles of construction waste are sprouting everywhere. The level of pollution and its consequences, including bad air quality, have reached an obnoxious level. And this is why those who do not understand what growth brings are linking everything to economic growth, rather than the sector itself, lack of implementation, lax policies, and the mischievous young tourists.

We need to step up our control and increase the penalties, as has already been done, and if need be, deploy additional human resources to address these challenges. That would represent truly productive employment and meaningful work.

The post The problem is not economic growth but those who don’t understand economics first appeared on The Malta Business Weekly.

According to NATO data on defence expenditure, Germany, Poland, and the Baltic states are leading in defence spending in Europe. Typically, one observes how the European Commission’s Rearm Initiative and Safe highlight Europe’s institutional response. German chancellor Friedrich Merz promised a more European alliance, while the Trump administration has added pressure on Europeans to increase defence budgets and reduce their dependence on US technology.

Notice how the European allies pledged hundreds of billions in new defence commitments across the continent. Secretary General of NATO, Mark Rutte announced new deals and partnerships across allies and industrial bases, unveiling new multinational partnerships in surveillance, space, command and control, air platforms, submarines, and a massive drone and counter-drone marketplace. These are valued at $50 billion. Still, the question remains: is Europe actually building an independent defence industrial base or just paying more for American weapons assembled on European soil?

Let us start by examining what Germany is doing to beef up its arsenal. Its acquisition and deployment of the Israeli Arrow 3 system is the flagship contribution. It was launched on 13 October 2022 by then-chancellor Olaf Scholz in the wake of Russia’s full-scale invasion of Ukraine. Its four main goals comprise:

• Rapidly fill capability gaps in European air and missile defence;
• Enable joint procurement of systems for cost savings and faster delivery;
• Improve interoperability, training, maintenance, and logistics; and
• Strengthen the European contribution to NATO’s Integrated Air and Missile Defence (IAMD).

Moving on, let us discuss the European Sky Shield Initiative (ESSI) concept. This promotes a layered approach using existing or near-term systems. It is a Germany-led multinational framework launched in October 2022 to strengthen Europe’s ground-based air and missile defence capabilities through joint procurement and coordination.

The primary goal is to create a multi-layered, integrated European air defence network that fills capability gaps, enables faster and more cost-effective acquisitions, and reinforces NATO’s Integrated Air and Missile Defence system. By comparison, Israel’s multi-layered Arrow 3 defence concept intercepts intruder missiles outside the atmosphere. Arrow 3 was acquired by Germany as a cornerstone of the initiative’s upper tier. ESSI is complementary to, but distinct from other efforts, such as more recent European discussions on developing indigenous interceptors or broader anti-ballistic coalitions involving Ukraine. It remains primarily a pragmatic procurement and cooperation vehicle rather than a fully integrated single-command system.

Many have praised Germany’s commercial link to Israel, particularly the acquisition of the Arrow 3 system in late 2023, valued at approximately €3.5-4 billion:

1. Shared training, maintenance, and logistics;
2. Integration into broader NATO structures while allowing national flexibility in contributions; and
3. Concrete steps include coordinated Patriot missile purchases, with individual nations ordering IRIS-T SLM units through the framework.

It provides Germany, and by extension parts of Europe, with interception capability against medium- and intermediate-range ballistic missiles. Its sole contractor is Israel Aerospace Industries (IAI), with US involvement through Boeing and Israeli subcontractors, including Elbit and Rafael. Recently, three sites have been planned in Germany for nationwide coverage, with full operational capability targeted around 2030.

As a background note, Germany acquired Arrow 3 as a direct response to the ballistic missile threat demonstrated by Russia’s war against Ukraine and as a major contribution to the European Sky Shield Initiative (ESSI). It sits as the upper layer above medium- and long-range systems such as IRIS-T SLM and Patriot.

In conclusion, the Ankara Summit this year demonstrated beyond doubt that NATO remains resilient despite recent disagreements among its members. Europe is gradually evolving into a stronger and more capable security actor within NATO, contributing to collective defence and thereby reinforcing the Alliance. Rather than pursuing strategic autonomy, most European nations are pursuing greater strategic responsibility, developing their military, industrial, and technological capabilities to shoulder a greater share of regional security while preserving the transatlantic alliance.

This year, the Ankara Forum focused on Allied progress towards reaching NATO’s historic 5% defence investment plan and on how this money is being put into action to generate increased defence production, cooperation, and joint procurement. Private capital providers are being sought to enable non-traditional suppliers, including small and medium-sized enterprises, to scale operations by financing product development and production. Private capital providers can act as force multipliers for Allied defence spending by attracting additional capital to grow defence industrial capacity, increase production across the Alliance, and meet Allied capability requirements.

The post At the Ankara Summit, Europe gears up its defence spending first appeared on The Malta Business Weekly.

Looking at the first half of 2026 compared to the same period in 2025, the nominal average spend per tourist presents a split reality across the Mediterranean basin. In Spain, total international expenditure grew strongly, pushing the nominal average spend per tourist up to approximately €1,366, representing a solid gain of over 2.6% compared to the previous year. Greece recorded an even more pronounced upward trajectory, where high-end tourism expansion and shoulder-season arrivals drove average spending per trip up by over 8.6% to around €717. Italy and France both exhibited steady, resilient gains in per-tourist expenditure, reaching approximately €770 and €775 respectively, representing modest annual increases of around 2.0% and 1.9%. Conversely, island destinations experienced noticeable downward pressure on per-tourist figures. Malta saw its average spend per tourist decrease by nearly 2.8% to €800, down from €823 in the same period of 2025. Cyprus suffered the sharpest drop, with per-visitor nominal spend falling by over 7.4% to €623 as hoteliers engaged in rate discounting to cushion against regional geopolitical headwinds.

A comparative analysis of these per-tourist figures highlights two distinct destination trajectories across Southern Europe. On one hand, continental Western Mediterranean powerhouses like Spain, France, and Italy, along with Greece, successfully expanded their average revenue per visitor by capitalizing on high value hospitality investments, long-haul travel recovery, and strategic off-peak marketing. On the other hand, island economies like Malta and Cyprus faced a contraction in total spend per visitor. Malta’s decline occurred despite a massive 18.1% surge in total tourist arrivals, proving that volume growth does not automatically translate into higher expenditure per visitor. In Cyprus, the contraction reflected broader external disruptions that altered visitor profiles and forced aggressive pricing adjustments.

This divergence in per-tourist expenditure cannot be properly understood without analysing the continuous, Europe-wide trend toward shorter trip durations. Comparing the average length of stay from the pre-pandemic baseline of January to June 2019 against January to June 2026 illustrates a systematic contraction across all 6 Mediterranean destinations. In 2019, tourists in Cyprus stayed an average of 9.2 nights, whereas by 2026 that figure had compressed to 7.5 nights. Malta experienced a similarly sharp reduction, falling from 6.8 nights in 2019 down to 5.5 nights in 2026. Greece witnessed its average trip duration shrink from 7.4 nights in 2019 to 6.1 nights in 2026. Spain saw average stays decrease from 7.8 nights in 2019 to 7.0 nights in 2026, while France dropped from 5.3 nights to 4.7 nights. Italy, which already maintained the shortest average stay due to its heavy weekend city-break volume, compressed further from 4.2 nights in 2019 to 3.6 nights in 2026.

Comparing these length-of-stay contractions reveals that smaller island nations and traditional sun-and-beach destinations experienced the most dramatic erosion in vacation duration. Malta and Cyprus registered the largest relative losses in stay length, driven by the rapid expansion of budget airline routes that encourage frequent 3-to-4-night micro-vacations rather than traditional fortnight holidays. Spain, France, and Italy demonstrated greater relative stability in trip duration, largely because their diverse product offerings—ranging from cultural city tours and business conventions to regional countryside retreats—naturally accommodate varied travel schedules. Across all 6 nations, however, the fundamental reality remains the same: modern tourists are taking more frequent trips throughout the year, but spending fewer total days on the ground during each visit.

When the analytical focus shifts from per-tourist expenditure to average spend per night, the economic picture undergoes a dramatic reversal. Comparing the first half of 2026 against the first half of 2025, nightly spending rates actually increased across nearly all 6 nations, offsetting the impact of shorter stays. Spain’s average nightly spend surged to roughly €214, reflecting a notable year-on-year increase. Malta recorded a good performance in nightly yield, with its average spend per night climbing over 4.2% to approximately €152.17 across the 6-month period, and peaking at nearly €176.80 in June 2026. Greece and Italy both saw average daily expenditure rise by around 6.0% to 8.0%, driven by elevated room rates and higher daily food and beverage spend. France maintained high daily spend averages exceeding €165 per night. Cyprus was the sole nation where nightly expenditure remained constrained, hovering around €90 per night due to widespread promotional discounting.

A comparative analysis of nightly spend underscores how a drop in total spend per tourist can obscure underlying commercial pricing power. Malta presents a striking example of this phenomenon: while its spend per tourist dropped because visitors stayed fewer nights, its spend per night increased significantly. Travelers who condense their vacations into shorter windows compress their discretionary budgets, spending more money per day on dining, activities, and commercial lodging. Consequently, destinations across Europe are generating higher revenue per individual guest night even as total trip lengths decline.

When taking the inbound tourism figures for Malta for H1 2026 against H1 2025, across traditionally high-spending tourist source markets—the USA, Switzerland, France, and Germany, this highlights structural shifts in traveller yield. Across the first half of 2026, long-haul and premium European travelers recorded declines in average total spend per tourist compared to H1 2025 benchmarks. US visitors, historically Malta’s highest spenders, averaged €1,080 per trip in H1 2026, down from €1,150 in June 2025. Swiss (€945) and German (€890) travellers experienced per-tourist spend contractions, while French spend (€815) remained compressed.

This per-visitor drop stems directly from shrinking stay durations. Average length of stay across these premium markets contracted from 6.4 nights in June 2025 to 5.7 nights in H1 2026, with German and French trips shortening most rapidly.

Conversely, average spend per night expanded. Elevated hotel rates pushed nightly spend among US (€189/night) and Swiss (€166/night) visitors higher than June 2025 averages (€179 and €158).

From an overarching economic perspective, despite the impressive daily rates generated by short-break travelers, long-stay tourists remain fundamentally more valuable to a destination’s long-term health. The primary reason lies in the distinction between gross revenue and net economic yield. Every tourist, regardless of how long they stay, generates fixed infrastructure costs and environmental externalities, including airport capacity demands, transportation congestion, water usage, and municipal waste generation. A destination hosting 100 tourists staying for 10 days generates the exact same number of guest-nights as a destination hosting 500 tourists staying for 2 days. However, the 500 short-stay tourists require 5 times the transit check-ins, 5 times the hotel turnovers, and generate vastly higher peak-time congestion, imposing a far heavier burden on public services and local infrastructure.

Furthermore, long-stay tourists demonstrate far superior capital distribution throughout the local economy. Short-stay visitors inevitably cluster within tight geographical radii surrounding primary transport hubs, major landmarks, and international hotel chains, leaving their financial footprint concentrated in a handful of corporate hands. In contrast, travelers who remain in a destination for longer periods gradually venture beyond tourist hotspots. They shop at neighborhood markets, dine at non-central family-run restaurants, utilize regional public transport, and participate in local cultural experiences. This decentralizes tourist capital, directly enriching small and medium enterprises across the broader community. Longer stays also carry a significantly lower carbon footprint per day spent, as aviation emissions are amortized over a longer duration on the ground. Therefore, while short-stay visitors temporarily boost immediate daily spending figures, transitioning toward a tourism model built on longer stays delivers higher net profit margins, protects civil infrastructure, mitigates overtourism, and ensures that tourism economic value genuinely trickles down into the domestic host community.

The metric of average spend per night inherently favours tourist volume over value, encouraging high-turnover arrivals rather than total economic yield. In theory, if we take Malta’s total nominal tourist spend of €3.9 billion in 2025 and assume each visitor spent just 1 night at the average spend per night of €153.54, Malta would have needed 25.4 million tourists—instead of the actual 4.02 million—to generate the exact same nominal revenue. This demonstrates how focusing on nightly metrics distorts sustainable economic growth by masking the true value of longer stays.

It is precisely because of these deeper economic realities—net yield, broad spatial distribution of wealth, lower infrastructure strain, and genuine local spillover—that average total spend per tourist stands out as the far superior metric over average spend per night. Focusing solely on spend per night creates a dangerous illusion of economic success. A destination might celebrate a high nightly rate of €176 while ignoring that a transient, 2-night visitor spends only €352 in total, contributes heavily to airport congestion, relies on low-cost carrier infrastructure, and rarely leaves the immediate hotel district. Conversely, a long-stay visitor spending €1,366 over 10 days delivers nearly 4 times the capital to the host country, amortizes their environmental footprint over a longer period, and distributes wealth across diverse regional sectors. Average total spend per tourist captures the true macro-economic contribution of a human visitor to a nation’s national accounts, whereas spend per night merely measures short-term operator pricing power. Destinations that prioritize spend per night risk falling into the trap of over-tourism: celebrating elevated daily prices while their local infrastructure crumbles under the weight of excessive visitor turnover.

In conclusion, comparing Malta’s inbound tourism performance against its Mediterranean competitors highlights a destination achieving unprecedented volume records while navigating acute structural vulnerabilities. While competitors like Spain (+2.6%), Greece (+8.6%), Italy (+2.0%), and France (+1.9%) successfully grew their average total spend per tourist in early 2026, Malta suffered a 2.8% decline to €800 per visitor. This dynamic stems from Malta’s sharpest-in-class length-of-stay reduction, dropping 17.9% from 6.7 nights in 2022 (and 6.8 in 2019) down to 5.5 nights in 2026. While Malta easily outperforms Cyprus (-7.4% in spend per visitor) due to Cyprus’s regional geopolitical headwinds, Malta’s strategy relies heavily on low-cost carrier volume, which reached over 60% of total air traffic. Moving forward, Malta faces significant challenges: its hyper-dense island geography leaves infrastructure, waste management, and residential communities highly sensitive to mass tourist turnover. To build a resilient tourism future, Malta must pivot away from chasing raw arrival numbers—which reached 2,131,825 in the first half of 2026 alone—and focus on extending visitor stays, enhancing product quality, and restoring average total spend per tourist as its primary strategic north star.

The post Average spend per tourist or average spend per night? first appeared on The Malta Business Weekly.

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.