Malta records Q2 deficit as Government debt surpasses €11 billion

Malta’s Government moved from a surplus to a deficit in the second quarter of 2025, as total debt climbed above €11 billion, the National Statistics Office (NSO) reported.

Between April and June, the Government posted a deficit of €170.4 million, reversing a surplus of €55.2 million in the same period last year. This shift came amid rising expenditures and declining revenues.

Total revenue fell to €1.96 billion, down €38.7 million from Q2 2024, mainly due to reductions in current taxes on income and wealth (€98.5 million) and property income (€3 million). In contrast, increases were recorded in market output (€43.4 million), social contributions (€8.6 million), taxes on production and imports (€7 million), and capital transfers receivable (€4 million).

Meanwhile, total expenditure rose by €170.4 million to €2.13 billion, driven by higher spending on salaries (€69.9 million), intermediate consumption (€50.1 million), social benefits and transfers in kind (€40.5 million), and subsidies (€32.9 million). Offsetting factors included reduced current transfers payable (€65.3 million).

Accounting adjustments to align with the ESA 2010 system reduced the deficit from €217 million to €170.4 million, reflecting a change in reporting rather than real savings.

By the end of June, government debt reached €11.1 billion, up €1.01 billion from a year earlier and equal to 46.9 per cent of GDP.

Almost all of this was Central Government debt, while Local Government debt was just €2.3 million. The rise mainly came from long-term debt securities (€812.3 million), short-term debt (€107 million), and long-term loans (€92 million).

Looking at the broader fiscal picture, NSO data shows that Malta’s 2024 deficit was €811.9 million, equivalent to 3.5 per cent of GDP, an improvement from 4.4 per cent in 2023.

General Government debt for 2024 stood at €10.6 billion, representing 46.2 per cent of GDP, with a neutral Stock-Flow Adjustment indicating alignment between the fiscal deficit and debt growth.

The rising debt and Q2 deficit highlight the challenges Malta faces in balancing public finances, particularly amid growing expenditure pressures.