Economic forecasts show that the government aims to balance its books, in real terms, in 2029 or 2030, Finance Minister Clyde Caruana said yesterday. It is envisioned that minor budget surpluses are experienced in 2029 and 2030, ending a long trend of annual budget deficits.
Addresing the media, Caruana said that Malta’s national GDP is projected to keep increasing from €24.6 billion in 2025 to almost €34 billion by 2030. Forecasts indicate rates of economic growth of between 6-7% for each year, in nominal terms, till 2030, and real growth levels of around 4% annually throughout this coming half-decade. In 2030, the national GDP is forecasted to grow by 7.1% in nominal terms.
As national GDP looks to keep rising, the country’s burden of debt is projected to decrease by 0.6% each coming year, he said.
This information was given following the earlier announcement that Malta has lowered its budget deficit to 2.2% of its GDP, thus falling in line with EU fiscal rules as the country looks to emerge from its excessive budget deficit procedure after incurring recurrent excessive budget deficits.
By the end of 2026, the budget deficit is aimed to decrease to 1.6% of the national GDP, then down to 1.0% by the end of 2027, before being equivalent to 0.4% of the GDP by the end of 2028.
A minor budget surplus of 0.1% is forecasted for 2029 and 2030 respectively, he said
Caruana said that these projections do not include the implementation of the long-awaited national metro project. He told journalists on Wednesday that, at the moment, the metro’s financial feasibility is currently being discussed.
The metro was announced in 2021, some months prior to the 2022 general election. The original proposal for the national metro – a fully underground system – was set to cost the country €6 billion before being scrapped for a hybrid system (with parts underground and overground) worth half the original amount, now projected at €2.8 billion.
Minister Caruana had previously stated that the country would be “royally screwed” if it gets the metro project wrong. On Wednesday, he repeated this sentiment and said that budgets will be adjusted if the metro is to be included in the budget estimates for the coming five years.
The Finance Minister said that the national debt is set to moderately keep rising, in total terms, over the coming years. The national debt is currently measured at €11.4 billion, as of the end of 2025; by 2030, it is set to climb to €13.2 billion.
However, Caruana dispelled “scaremongering efforts” by the Opposition on national debt levels and assured that debt levels are under control.
“We are expecting the burden of debt in the country, till 2030, to decrease to below 40% – in spite of all the global challenges and assistance we are providing to families,” Minister Caruana said.
The burden of debt is set to decrease from 46.4% of Malta’s GDP in 2025 to 38.9% by 2030, reflecting a gradual reduction of 7.5%.
The reduction of Malta’s annual budget deficit to 2.2% of the GDP outperformed expectations outlined by Caruana himself during his last budget discourse. In the last annual budget, he had forecast a deficit rate of 3.3%.
This update shows that “the deficit has gone down substantially and convincingly” – well below the EU’s 3% threshold, as per EU fiscal rules.
Additionally, the national debt is “comfortably below” the EU’s recommended 60% mark, he said.
The Finance Minister said that a few months ago, through a constitutional court ruling that went in favour of national bank shareholders, the Maltese government had to pay out compensations worth a total of 0.3% of Malta’s GDP. He stated that if it weren’t for this ruling, last year’s deficit would have been calculated at 1.9% of the GDP, and so “this is a clear indication that the national deficit has gone down substantially.”
Caruana remarked that according to these forecasts, over the next five years, Malta’s burden of debt shall decrease to levels that haven’t been observed since the mid-1990s. He said that “this greatly contrasts the scaremongering of those attempting to ridicule the numbers, to try and say that our fiscal situation is out of control.”
Referencing Eurostat statistics published earlier in the day, Caruana said that in 2025, Malta recorded the tenth lowest burden of debt (i.e., debt as a proportion of the national GDP) among all 27 European Union Member States.
“If our country has so many issues, what do the other 17 countries ranking worse than us have?” he asked, dismissing criticisms against present fiscal handling.
He added that he remains optimistic that citizens “will not deal with any of the issues” caused by austerity policies that other countries have imposed onto their citizens. Caruana reiterated that implementing austerity measures can be counterproductive, as tightening the belt too much could lead national fiscal performance going down anyway if it results in consumption levels and economic activity reducing too much as a result.
Speaking against the PN Opposition’s criticisms of how national finances are being handled, Minister Caruana said that while the Opposition “is spreading discourses on the national debt like the country is on the verge of bankruptcy,” in his view, results will show “everything they have said is the fruit of their misunderstanding of how fiscal policies work.”
In this regard, he dismissed arguments that the Malta’s budget deficit should have gone down sooner, stating that “the deficit had to decline gradually so we don’t kill the economy.”
The Finance Minister said that following these positive results, his Ministry is now waiting for the opening week of June when the European Commission will recommend which countries can exit excessive budget deficit procedures. He said that this recommendation will be announced on 3 June and, on 10 June, EU countries’ finance ministers will vote to confirm these recommendations.
Minister Caruana observed that Malta has managed to reduce its budget deficit despite all the exogenous shocks that emerged in the 2020s so far, including the ramifications caused by the Covid-19 pandemic, Russia’s invasion of Ukraine, and the sustained turmoil in the Middle East that has recently worsened.
In 2020, due to the pandemic and the financial assistances provided to keep the country afloat during that period, the budget deficit was measured at 8.7% of the GDP.
On the subject of interest payments, another point of criticism by the Opposition, the Minister for Finance said that the burden of interest (i.e., interest payments as a percentage of the GDP) is currently sitting at around 1.2%. He noted that these are among the lowest levels observed in the past 30 years. At peak, in the year 2000, the burden of interest stood at just over 4.0%.
Caruana said that these financial estimates can be reached, noting that they are “conservative” estimates.
