Malta's Finance Minister, Clyde Caruana, has presented the government's preliminary projections for the 2026 budget, forecasting a deficit of 4.5% of Gross Domestic Product (GDP). This figure represents a significant increase from the 3.9% deficit recorded in 2025 and exceeds the European Union's 3% reference value under the Stability and Growth Pact.
Minister Caruana attributed the widening deficit to persistent global economic headwinds, including higher energy prices and supply chain disruptions, which continue to impact the small island nation. He also cited rising costs associated with the country's public sector wage bill and social support measures introduced in recent years.
The government's projections indicate that public debt is expected to stabilize at around 53% of GDP. Caruana emphasized that while the deficit is a concern, the Maltese economy continues to show resilience, with growth forecasts for 2026 remaining positive, albeit at a moderated pace compared to pre-pandemic levels.
Opposition parties have criticized the projections, arguing that the government's fiscal management has led to unsustainable spending. The final budget for 2026 will be presented to parliament in the autumn, following a period of consultation and review of these initial figures.
