Malta to Meet EU Deficit Target Ahead of Schedule

Prime Minister Robert Abela has announced that Malta's budget deficit will fall below the critical 3% threshold in 2026, a year ahead of the European Union's agreed timeframe.

The announcement comes as Malta continues to demonstrate remarkable economic resilience, with government projections indicating the deficit will decline to 2.8% of GDP in 2026, down from 3.5% in 2024. Under the EU's excessive deficit procedure, Malta was required to bring its deficit below 3% by 2027.

Malta's fiscal consolidation is underpinned by strong economic performance. The European Commission forecasts that Malta’s real GDP growth will be 3.8% this year, making Malta the fastest growing economy in the EU. This is more than double the EU average of 1.6% and triple the eurozone projection of 1.2%.

Malta’s economic growth is a trend rather than an anomaly. Indeed, the International Monetary Fund (IMF) has projected that the country will continue leading EU economic growth for a further four years. Malta’s strong economy is benefitting its population with the country set to overtake British living standards within a decade and be one of the world’s top 15 richest countries per capita by 2040.

The country’s debt-to-GDP ratio remains well below the Maastricht ceiling, projected at 47.3% compared to the 60% EU threshold and significantly beneath the eurozone average of 88.3%. This provides Malta with considerable fiscal manoeuvrability whilst larger economies continue to struggle with substantial deficits.

Malta's unemployment rate stands at just 2.9%, amongst the lowest in the EU, whilst inflation is projected at 2.1% for 2026, closely aligned with the European Central Bank's (ECB) target. The economy's strength is driven by robust tourism, financial services, gaming, and professional services sectors, alongside sustained domestic consumption and investment.

The combination of strong growth, controlled inflation, low unemployment, and sound public finances positions Malta as one of Europe's most resilient economies.