Government plans to increase debt to €13.4 billion by 2027

Finance Minister Clyde Caruana plans to increase the island’s surging debt by another €2.4 billion over the next three years, reaching a record €13.4 billion by the end of 2027, excluding any significant and unpredicted economic hiccups.

While no budget adverts or billboards highlight this negative aspect of Malta’s public finances and its leadership, tables in the budget estimates show how Labour continues to base its fiscal policy on heavy lending requirements, which are used primarily to pump out short-term sweeteners that have no real impact on the economy and little on people’s pockets.

Buried in the 112-page budget speech, the finance minister presents a dark forecast.

While the Maltese economy remained resilient, backed by a 130,000-strong cheap labour foreign workforce pumping hundreds of millions of taxes into state coffers, the government continued to increase its loans instead of taking the opportunity to make robust savings and reduce its overall debt.

According to the estimates, in 2024, the government will borrow a further €1.7 billion, partly to cover its annual deficit of almost €1 billion.

At the same time, the estimates show that over the coming three years, Clyde Caruana is already planning to borrow a further €4.7 billion as he continues to dish out sweeteners in the form of tax cuts, subsidies and other forms of political favours from money the government doesn’t have and needs to borrow.

While the government’s debt will surpass €11 billion for the first time in history by the end of this year, Caruana is planning to continue on this dangerous trajectory, hitting €13.4 billion by 2027.

At the same time, Caruana boasted in his recent speech that the general government deficit, compared to the Gross Domestic Product, is on a downward trend, thanks to a growing economy.

While predicting economic growth of 4.3% more in 2024, Caruana still planned his budget on a deficit of almost €900 million in 2025, which he will need to borrow and increase the debt further.

To sustain the spending of unnecessary funds, particularly hundreds of millions in all forms of giveaways, Malta will pay €312 million in interest on its €11 billion debt next year.

In an unchanged interest rates scenario – impossible to forecast – taxpayers will be spending €400 million in interest rates by 2027.