During today’s press conference by Finance Minister Clyde Caruana, we asked the Minister two pertinent questions. First, we reiterated our question about the price at which the government is purchasing electricity from Electrogas. We then asked the Minister whether the government has a plan to wean off subsidies by transitioning the subsidy expenditure from recurrent to capital expenditure, with the aim of lowering electricity bills.
The answer to the second question was in the affirmative and the Minister said hat the government has a long-term plan, which is already in place, to lower electricity bills with significant investments in renewable energy sources. This is the first time that such a policy was publicly and explicitly stated by a government official.
So far, the government has simply bragged repeatedly that subsidies will go on indefinitely and never did it lay out a policy to wean off subsidies on a long-term timeframe.
This is basically also the policy of the Nationalist Party and practically both political parties are in accordance – irrespective the partisan propaganda.
The way he explained the policy also reminded me about the comparison to a Third World-Economy. He said that if a patient is bleeding and needs a blood transfusion, your immediate priority is to provide the blood before effecting a long-term cure. His analogy is correct, but it is also an admission that Malta’s economy is still as vulnerable as a Third World economy. Just like a Third-World Economy, Malta’s economic growth is heavily dependent on low oil prices while high oil prices guarantee significant economic pain. The Finance Minister insisted that Malta can not play or risk having high electricity prices as this could jeapordise economic growth.
To anyone with a critical understanding of finance, it is clearly understandable that the Minister is implying that Malta does actually need to wean off its dependency on oil prices (and hence remove subsidies) and this is why he went straight to renewable energy sources as the final solution.
As for the other question, the Minister said that I should re-direct my question to Enemata and refused to answer it.
During the press conference, Minister Caruana laid out his financial estimates which he deemed as conservative. The Minister is estimating that if economic growth is sustained, the government will achieve an annual budgetary surplus by 2029. The Minister is banking on a policy that sustained economic growth will increase revenue to the extent of fully offsetting the deficit.
The Minister announced that the deficit for last year came at 2.2% which is lower than the average of year 2024 at 3.4%. He said that this was owing to economic growth. The Minister also showed us statistics about the deficit going down from 8.7% in 2020. According to the NSO, the government’s total deficit for 2025 was at €545.3 million.
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