Clyde Caruana plans €724 million deficit and €13.13 billion debt in 2027

The government expects Malta’s deficit to increase to €724 million in 2027 and public debt to reach €13.13 billion, according to forecasts presented by Finance Minister Clyde Caruana with Budget 2027.

The figures show the government plans a larger annual shortfall and higher debt next year. This while the same Minister boasts of booming economic growth and the distribution of unproductive sweeteners, including a so-called super bonus.

The deficit is forecast to rise by €45 million from the revised €679 million estimate for 2026. Public debt is expected to increase by approximately €826 million over the same period.

A deficit arises when the government spends more than it receives during a year. Debt is the total amount it owes. Annual deficits generally add to debt, although other financial transactions also affect the amount owed.

The government forecasts the deficit will remain at 2.6% of gross domestic product, the same as this year, despite Caruana’s promises before the election to continue to reduce the deficit every year.

Debt is also forecast to edge upwards as a share of GDP, from 46.70% in 2026 to 46.76% in 2027, despite a growing economy.

The government’s own projections therefore show no reduction in either the deficit ratio or the debt ratio next year, as was Clyde Caruana’s original plan in 2025.

The revised position for 2026 is nevertheless better than the minister originally forecast when presenting Budget 2026 last year.

At that stage, he projected a €751 million deficit, equivalent to 2.8% of GDP.

The government’s published plans place the next reduction in the deficit ratio in 2028, when it is expected to fall to 2.2%, followed by 1.8% in 2029.

The debt ratio is likewise projected to decline after 2027. However, the amount owed continues to rise, reaching approximately €13.85 billion in 2028 and €14.48 billion in 2029.

Those projections depend on economic growth outpacing the increase in debt. This would further require more cheap labour imports to sustain the current level of economic growth or higher productivity.