European Commission confirms Malta met fiscal targets ahead of schedule

The European Commission has recommended that Malta be removed from the European Union’s Excessive Deficit Procedure (EDP), after the country reduced its budget deficit below the EU’s 3% threshold earlier than expected, the government said Wednesday.

In a statement, the Maltese government welcomed the Commission’s recommendation, describing it as recognition of the country’s strong fiscal performance.

Malta’s deficit fell to 2.2% of Gross Domestic Product (GDP) in 2025, significantly below the 3% limit set under EU fiscal rules. The country had been placed under the Excessive Deficit Procedure in 2024 when its deficit stood at 4.9% of GDP.

The government said the improvement exceeded the targets agreed with the European Commission and was achieved ahead of schedule.

According to Eurostat data cited by the government, the average budget deficit across the European Union stood at 3.1% of GDP, compared to Malta’s 2.2%.

The statement noted that several EU member states continue to record deficits at or above the 3% threshold, including Belgium, France, Italy, Austria, Poland, Romania, Slovakia, Finland, Hungary, Bulgaria and Croatia. While Malta brought its deficit below the threshold last year, Bulgaria and Croatia exceeded the limit for the first time.

The government argued that the reduction in the deficit was driven by economic growth rather than austerity measures. It pointed out that Malta remained the only EU country last year not to increase prices for electricity, gas, petrol and diesel through state support measures.

The statement also highlighted that the fiscal improvement came despite what it described as the largest tax cut in Malta’s history, alongside increases in pensions and social benefits.

The European Commission has also projected a further improvement in Malta’s public finances in the coming years, the government said.

The government described the recommendation as another positive endorsement of its economic policies, arguing that sustained economic growth has enabled it to support families and businesses while strengthening public finances.

It added that the result provides a solid foundation for the implementation of its electoral programme, following the mandate it received in last Saturday’s general election.