Government to borrow another €1.5 billion this year

The government plans to borrow a further €1.5 billion this year to supplement its spending, according to its plan published this week as required by law.

Finance Minister Clyde Caruana announced that the government will issue more bonds to ensure it has enough money to sustain its growing expenditure.

Despite the government boasting of economic growth higher than the average in the EU, it still has to increase its borrowing requirements to counter rising expenditures across most sectors of its administration.

Most of this year’s borrowing, a staggering €850 million, will go to service the deficit planned for the current year, as announced in the last budget.

Additionally, the government will need to borrow another €540 million to pay back existing bonds that mature during the year.

The government’s new borrowing requirements are expected to increase the island’s growing debt, which is expected to reach almost €12 billion by the end of the year.

This means that since Robert Abela’s time at the helm of government, the island’s debt will double, from less than €6 billion in 2020 to €12 billion by the end of the year.

The increase is also significant compared to the Gross Domestic Product (GDP).

While Malta is recording a consistent growth rate, surpassing 4.5% in 2024, it is still not managing to take advantage of a favourable economic climate and reduce its deficit.

While the government is estimated to close 2024 with a debt of 49.5% of GDP, this will increase to 50.1% by the end of 2025 amid a strong economic forecast.

According to Finance Minister Clyde Caruana, Malta is expected to close 2027 with a debt of €13 billion—the highest ever recorded in the country. This debt will require €400 million a year in interest payments.