In a press conference titled “Pre-Budget Consultation 2026”, the Minister for Finance Clyde Caruana said that global economic forecasts as per the IMF cite lower economic growth due to rising economic protectionism. However, the Finance Minister added that Malta will still have the strongest economic growth in Europe. The forecasts also resonate with those of the European Central Bank.
To highlight Malta’s economic success, the Finance Minister referred to other countries in Europe like the UK and France which are raising taxes or trying to cut fiscal budgets to address fiscal challenges. He also warned of European companies leaving Europe to cross the Atlantic.
He described Malta’s economic recovery from the Covid pandemic as a marathon and said that the economy has recovered. The Finance Minister said that Malta will have an average of 4% growth and highlighted the labour market as Malta’s key to its growth. The Minister also reiterated that Malta had the lowest unemployment rate in Europe and said no new taxes will be introduced.
On inflation, the Minister said that inflation in Malta is going down at the same time when the government is also successfully bringing down the deficit. The Minister reiterated that the government will keep taking social measures to address social issues. The Minister also said that inflation is expected to be moderating around 2% in line with the ECB’s forecasts as long as the international political situation doesn’t change and new conflicts or wars emerge.
On taxes, the Minister said that the era in which people don’t pay tax is over. Last year the government collected €1.2 billion more in taxes he said and that these efforts will continue. The Minister also said that the government helped everyone and every company during the Covid pandemic with people calling him as late as 9PM asking for help. Now, the Minister expects everyone to fulfill their tax obligations. The Minister also said that this year the government expects significantly higher revenue.
On food and energy subsidies the Minister said that these have been reduced but energy subsidies still remain at around €200 million per year and they are essential for many companies to subsist. The Minister also said that Malta has the lowest energy prices in Europe due to the energy subsidies.
The Minister concluded by saying that the Labour government’s fiscal success can be highlighted with its success at responsibly controlling fiscal expenditure and the deficit. He said gone are the times when the press was filled with headlines on concerns about the deficit.
When questioned by journalists, the Minister reiterated that Malta’s low birth-rate is Malta’s biggest challenge and said the issue needs to be addressed holistically and the government will be taking further measures on this issue.
The Ministry’s document can be downloaded here.
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