Government posts €339 million deficit in first quarter

Government spending continued to outstrip revenue by a wide margin during the first three months of 2026, with Malta recording a €339 million general government deficit and the national debt climbing to a new record of almost €11.5 billion.

Figures published by the National Statistics Office (NSO) show that the first-quarter deficit was more than double the €145.7 million registered during the same period last year, underlining the growing pressure on the country’s public finances despite continued economic growth.

The deterioration was driven by a sharp rise in government expenditure – coinciding with general elections, which increased by €296.3 million over the first quarter of 2025 to reach €2.34 billion. Revenue, by comparison, increased by just €42.5 million, reaching €2 billion.

According to the NSO, the biggest increase in spending came from intermediate consumption, which rose by €93.3 million. This was followed by social benefits and social transfers, which increased by €66.5 million, public sector wages, up by €54.4 million, and current transfers, which grew by another €46.5 million.

The latest figures also show that Malta’s debt continued its upward trajectory.

By the end of March, general government debt had reached €11.46 billion, representing an increase of €549.3 million over the same period in 2025. Most of the increase came through additional borrowing on the financial markets, with long-term government debt securities rising by €383.6 million and short-term debt securities increasing by €197.1 million.

Although Malta’s debt stands at 45.9% of GDP, comfortably below the European Union’s Maastricht threshold of 60%, the figures indicate that the government continues to rely heavily on borrowing to finance expanding expenditure.

The latest data also points to a growing burden for taxpayers.

Earlier this year, The Shift revealed that Malta’s annual interest bill on its national debt had surged by more than €100 million in just five years, reaching almost €300 million annually as rising debt levels coincide with higher interest rates.

With deficits widening again at the start of 2026 and government debt continuing to grow, the cost of servicing that debt is expected to rise further, increasing pressure on future public finances and leaving less room for spending on essential public services.