Malta Succeeds in Deficit Reduction

The National Statistics Office of Malta released a report on October 21 stating that the deficit level in 2015 decreased to €120.3 million, 1.4 percent of its GDP. As of June, Malta surpassed its deficit reduction target, resulting in a surplus of €10.8 million. This reduction is an improvement from the deficit, which was 2.1 percent of GDP in 2014, or €45.7 million. 2016 marks an even further improvement due to a €19.7 million increase in total revenue compared to 2015, when Malta’s total revenue was €905.1 million.

This increase in revenue is attributable to current taxes on income and wealth of around €40 million and taxes on social security contributions from employers and households, totalling around €15.5 million. Decreases in expenditure, mainly through gross capital formations, capital transfers, and property incomes, have also aided this deficit reduction. As a result, the total pre-tax gross wages of employees increased to €16.1 million and social benefits and social transfers, two components of social security, increased to €10.1 million.

The government is extremely optimistic about this stabilization of the economy. Finance Minister Scicluna, who presented the report, states, "Such growth is a certificate of the strong economic progress registered throughout this administration." In the past three years, the deficit has been lowered and now unemployment is at a record low. Prime Minister Joseph Muscat aims to use this “prosperity with a purpose” to financially help those who are unable to keep up.

Although Malta’s debt has increased, it has been outweighed by lower loans and equity. Overall, Malta met and exceeded their goal for deficit reduction. However, it remains to be seen if this positive trend will continue to the end of 2016.