Government finances slip into €518m deficit as expenditure outpaces revenue growth

Government finances registered a deficit of €518 million by the end of July 2025, marking a sharp reversal from the €60.3 million surplus recorded during the same period in 2024.

According to the National Statistics Office (NSO), the deterioration reflects a modest rise in Government revenue that was far outweighed by surging expenditure, including higher social security benefits, energy support measures, and capital investment in infrastructure.

Expenditure rises sharply

Total government expenditure for the same period rose to €4.62 billion, an increase of €592 million year-on-year.

Recurrent expenditure accounted for the bulk of the increase, climbing to €4.01 billion, up €472 million from 2024. The largest rise was under programmes and initiatives (+€218 million), with higher spending directed towards social security benefits (+€91.9 million), church schools (+€21.7 million) and energy support measures (+€16.5 million).

Additional pressures came from higher personal emoluments (+€0.12 billion), contributions to Government entities (+€95.4 million) and operational and maintenance expenses (+€41.8 million).

Meanwhile, interest payments on public debt increased by €20.4 million, reaching €168 million.

Revenue modestly rises

Between January and July 2025, recurrent revenue reached €4.1 billion, an increase of just €13.7 million compared to a year earlier.

The strongest gains were registered in social security contributions (+€98.4 million), customs and excise duties (+€33.7 million) and licences, taxes and fines (+€24.7 million).

These were offset by notable declines in grants (-€101 million), value added tax (-€44.3 million) and income tax (-€21.6 million).

Capital expenditure also rose significantly, reaching €443.8 million, up €99.3 million from 2024.

The main projects driving this increase included the development of a second electricity interconnector (€73.5 million), the RePowerEU initiative (€18.7 million) and investment incentives (€14.9 million).

Debt levels climb

By the end of July 2025, Government debt had grown to €11.2 billion, an increase of €1.39 billion over the previous year.

The rise was mainly attributed to higher Malta Government stocks (+1.29 billion), supported by increases in treasury Bills (+€81.7 million), foreign loans (+€77.7 million) and euro coins issued in the name of the treasury (+€3.8 million).

This was partially offset by a reduction in the 62+ Malta Government Savings Bond (-€38.5 million) and higher government fund holdings of Malta Government Stocks (-€23.5 million).