IMF report urges Malta to raise driving costs to curb congestion

Decisive measures to increase the cost of driving are necessary to effectively reduce car use and tackle Malta’s mounting congestion issues, according to a recent report by the International Monetary Fund (IMF).

The report, titled Taking Stock of Infrastructure in Malta, was authored by Alexander Pitt, a senior economist in the European Department of the IMF. It suggests that increasing fuel prices, raising vehicle taxes, and introducing charges for public parking spaces could help alleviate Malta’s infrastructural pressures. However, the Maltese government has no current plans to adopt these recommendations.

The findings emerged following Mr Pitt’s participation in a workshop held at the Central Bank of Malta and were first reported on Malta Today. While the report commends Malta’s “remarkable” economic performance over the past decade, it highlights how population growth and increased tourist arrivals have exacerbated infrastructure challenges, particularly road congestion.

Lessons from Singapore

The report draws comparisons between Malta and other densely populated regions, particularly Singapore. Despite having nearly double Malta’s rate of artificial land cover, car ownership in Singapore is significantly lower, thanks to a comprehensive public transport network that includes buses, metros, and light rail systems.

In contrast, Malta relies solely on a bus system, which, despite having a relatively large fleet – one bus per 200 residents, twice as many as the Balearics – struggles with limited uptake. According to the report, travel times remain long, and buses are equally affected by congestion.

While acknowledging ongoing Government efforts to manage traffic flows and introduce express bus lines, the report argues that these initiatives alone will be insufficient. “Reducing car use would likely also require measures to increase costs,” it states, pointing to fuel price hikes, vehicle tax increases, and public parking charges as potential solutions.

The limits of road expansion

The IMF report also casts doubt on the effectiveness of road expansion projects. With nine kilometres of road per square kilometre, Malta’s road density is already 21 times that of the Balearics. Citing international examples, the report warns that increasing road capacity often provides only temporary relief, as car ownership tends to rise with more road availability.

It suggests that a rail-based public transport system could offer a longer-term solution. However, such projects come with significant financial and logistical hurdles. For instance, a metro system would require investments amounting to approximately 34 per cent of Malta’s GDP over 15 to 20 years, while a tram network would face space constraints if built on the surface.

A call for long-term planning

The report identifies transportation as the area requiring the most urgent action, even as it acknowledges the high costs and extended timelines for sustainable solutions. It suggests that pricing measures on vehicles, fuel, and parking would provide immediate benefits in curbing car use.

Beyond transport, the report also discusses challenges in energy, water supply, and wastewater infrastructure. While current power and water capacities are deemed sufficient for the short term, medium-term investments are essential to meet future demand.

The report sees the forthcoming Vision Malta 2050 strategy as an opportunity to address these infrastructure concerns comprehensively. “Such a strategy, however, would also need to outline the investment needs and costs that arise from them,” it concludes.