Public debt increasing by a record €3 million a day

Malta’s public debt has been increasing by a staggering €3 million a day since Prime Minister Robert Abela and Finance Minister Clyde Caruana have been in charge of the state coffers, an analysis by The Shift has established.

Based on the latest statistics issued by Eurostat, the EU’s statistical arm, which confirm that Malta’s public debt reached a record €9 billion at the end of last year, figures show the country has been increasing its debt level since 2020. There is so far no indication of it slowing down.

In response to several recent scandals and his recent dip in public opinion polls, Abela has announced further handouts such as stipends and children’s allowances.

In the meantime, tens of millions of euros are being squandered every month on unnecessary jobs, direct orders, contracts and populist events with little to no economic effect.

Eurostat data on the EU’s Maastricht criteria fiscal rules show that since Abela became prime minister in January 2020 until December 2022, Malta’s public debt increased by €3.3 billion – equivalent to €3 million in new debt every single day.

In December 2019, the last full year of the Muscat administration, public debt stood at just €5.7 billion. In 2012, it was €4.8 billion.

Debt levels had increased under the Muscat administration by under €200 million a year between 2013 and 2019 and, in some years, it had even been reduced due to a budgetary surplus. Abela, however, began increasing state borrowing from day one in 2020, and the government borrowed a record €1.3 billion in 2021.

Abela’s administration increased the country’s debt by €1.2 billion in 2020, €1.3 billion in 2021, and €736 million in 2022.

According to the last budget estimates, Finance Minister Clyde Caruana plans to borrow a further €979 million this year to cover increasing government expenditure and pay off millions more in debt servicing costs.

Due to a substantial increase in international interest rates, expected to increase further still, the government is now paying more in interest for the debts it has accumulated that are still rising.

Also conscious of the state’s excessive spending and with millions in compensation for Air Malta employees on the horizon, Caruana has been harping on the need for taxpayers, particularly the business community, to pay their fair share of taxes.

While the government has taken advantage of the relaxation of EU debt and deficit rules that were temporarily lifted because of the Covid pandemic, these stringent eurozone rules will soon be re-introduced, and there will be little room left to manoeuvre.

Countries with an annual deficit of over 3% are expected to be put into an Excessive Deficit Procedure (EDP), which constrains governments to rein in spending significantly.

Caruana aims to close the year at a deficit of 5.5% of GDP, meaning Malta is expected to be placed on the EDP list as soon as temporary exemptions are lifted.