Malta hopes to cut its deficit in half next year as the economy improves.

Government anticipates a 5.6% deficit in 2022

In his budget address on Monday, Finance Minister Clyde Caruana stated that the Maltese economy shrank by 8.3 percent last year, just when the epidemic was at its peak. This year, GDP will rise by 4.8 percent in real terms, owing mostly to a modest rebound in the tourist industry. Growth is expected to be 6.5 percent next year.

As a result, the government intends to cut its fiscal deficit in half next year as the economy recovers from the impact of COVID-19. This year’s deficit is predicted to be 11.1 percent, far more than the 5.9 percent projected when the 2021 budget was unveiled.

According to the Finance Minister, the deficit would fall to 5.6 percent next year, and it is projected to go below the EU threshold of 3 percent by 2024. Next year, the debt-to-GDP ratio is anticipated to reach 61.8 percent. According to Eurostat data released on Monday, Malta’s 2020 deficit will be the second largest in the European Union, at 10.1 percent.

Minister Caruana explained that Malta could not escape substantial borrowing as a result of the epidemic. However, the Islands were the only EU member state to maintain their labour market, lowering unemployment, increasing the number of gainfully employed, and decreasing the number of idle people. Unemployment in 2019 was 3.6 percent, down from 3.2 percent in August of this year. In 2019, the employment rate was 76.8 percent, and it is 77.3 percent this year.