European Commission Moves To End Malta's Excessive Deficit Procedure

The European Commission has moved to close the excessive deficit procedure against Malta, recognising that the country has brought its deficit back within the European Union's fiscal limits. In a statement issued on Wednesday, the Commission confirmed that the excessive deficit in Malta has been corrected, and that the 2024 decision placing the country under the procedure should be abolished. 

The EU began proceedings against Malta in 2024, when the deficit stood at 4.9% of GDP. Under EU rules, member states are required to keep their deficit below 3% of GDP. Malta was one of seven countries placed under the procedure at that time, alongside Belgium, France, Italy, Hungary, Poland and Slovakia.

Malta has reached that target well ahead of schedule. While the deficit had initially been projected to fall to 3.5% in 2025, it dropped more sharply than anticipated to 2.2%, bringing it below the EU threshold for the first time since the pandemic. Finance Minister Clyde Caruana, had indicated the possibility of an early exit when presenting the country's fiscal forecast earlier in the year.

The outlook is positive. According to Caruana, Malta's deficit is projected to ease further in the coming years, with the country set to balance its books by the end of the decade. The European Commission's spring forecast projects the deficit will remain stable and easing slightly to 2.1% in 2027. 

Malta is set to be the only country removed from the excessive deficit procedure in this round. The decision requires confirmation by the Economic and Financial Affairs Council at its July meeting, though this is expected to be a formality.

For the business community, the development signals fiscal discipline and sound public financial management, reinforcing Malta's standing as a well-governed European economy and strengthening confidence in its longer-term economic trajectory.