Abela doubles debt to €11.1 billion

Since Robert Abela took over as Prime Minister in January 2020, Malta’s national debt has nearly doubled, reaching a record €11.1 billion by the end of August.

In his five and a half years in office, Abela has increased the country’s debt by €5.4 billion, averaging almost €1 billion per year. Despite this significant rise in debt, its management is still viewed as stable, mainly due to the economy’s continued growth, driven primarily by an increase in the workforce and government spending.

Although the debt figures are unprecedented, the debt-to-GDP ratio remains within acceptable limits according to EU guidelines, known as the Maastricht criteria. These rules signal concern when the debt-to-GDP ratio exceeds 60%. In Malta’s case, this ratio stands at under 48%, placing it in a safe zone.

In the last budget announcement, Finance Minister Clyde Caruana projected a deficit of €850 million for this year, with an anticipated debt of nearly €12 billion by the end of 2025. Although it is still early in the fiscal year, actual figures may be lower by the year’s end.

Maltese taxpayers currently pay approximately €300 million in interest on the national debt annually. By August, they had already contributed nearly €200 million toward this interest.

However, most of these payments ultimately benefit Maltese citizens, as the majority of the national debt is composed of Malta Government stocks. By August, Maltese stocks accounted for €9 billion of the total national debt.