Minister for Finance Clyde Caruana has promised a huge €608 million war chest to combat rising energy and food prices throughout 2023, saying that the Government does not “see a situation where we will stop doing what we’re doing”.
The commitment is equivalent to 3.6 per cent of Malta’s GDP, and will drive the deficit up to an estimated 5.8 per cent next year – well within the targets set last year.
The amount to be spent on such subsidies this year is expected to reach €472.5 million by the end of December, amounting to some three per cent of GDP.
The Minister was speaking during the official launch of the pre-Budget consultation document, where he explained that ten-fold increase in energy prices experienced over the last 12 months needed forceful intervention to prevent it severe harm to the Maltese economy.
“It makes no sense to have spent so much money on mitigating the effect of the pandemic, only to stop now,” he said.
Without energy subsidies, Malta would have an inflation rate that is 4.1 per cent higher than the EU average.
“In 2019, a unit of energy from the interconnector cost us 6c. It now costs us 54c,” he said.
Acknowledging the rising debt, Minister Caruana said that tax collection efforts, which have ramped up this year, will continue: “We need to make sure that Government collects every penny that it is due.”
However, he praised the Maltese state’s strong position entering the pandemic, which enabled it to ride out the two-year disruption and emerge with the necessary flexibility to now take action to cushion the impact of inflation, while continuing to improve the economy, which is expected to grow by four per cent next year.
We will continue supporting families and the economy until the international situation stabilises,” he said, and reiterated a pledge not to increase taxes or introduce new ones in the coming budget.
One such support measure is a cheque that will be issued to vulnerable families most at risk from inflation.
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