The Treasury of Malta has announced its annual borrowing plan for 2025, saying it intends to meet its financing requirements for the year through three to four issuances of Malta Government Stock (Maltese sovereign bonds) worth up to €1.5 billion, together with a preferential loan from the European Investment Bank.
A significant portion of the borrowing will be used to redeem maturing securities totalling €539.2 million.
Most of the rest will be used to finance the expected Government deficit of €850 million.
The Treasury said it will primarily rely on conventional fixed-rate Malta Government Stocks (MGS) to meet its borrowing requirements. The maturity structure of the MGS issues will include a mix of short-term and medium-to-long-term securities. Specific details, including maturities and terms, will be announced one to two weeks prior to each issuance.
The planned maximum of €1.5 billion in borrowings is less than the €1.7 billion and €1.6 billion planned for 2024 and 2023, respectively, despite considerably higher commitments to maturing securities (2025: €539 million; 2024: €489 million; 2023: €445 million).
On the other hand, the deficit forecast for 2025 is lower than that of the previous two years (2025: €850 million; 2024: €992 million; 2023: €980 million).
Higher interest payments
Most of the maturing securities carry a very low interest rate: €230 million of the maturing MGS has a coupon rate of 0.5 per cent, while another €139 million carries a coupon rate of 0.75 per cent.
The MGS to be issued this year will almost certainly carry a higher interest rate (issues in 2024 stood around the three per cent mark, depending on their maturity date) – meaning that the interest burden for the Maltese Government is expected to increase.
Total Government debt
The new borrowings will take Malta definitively past the €10 billion mark in total Government debt, a level it alternately passed and receded from throughout 2024.
Statistics for 2023 show that the vast majority (78.2 per cent) of Malta’s sovereign debt is held locally, by local banks, insurance companies, and households.
Malta’s public debt ‘very much in line’ with Eurozone rules – BOV Chair
The chairperson of Malta’s largest bank shrugged off the doubling in Maltese Government debt since 2019
Malta’s public debt tops €11 billion
The debt-to-GDP ratio remains well within EU limits
New EIB and BOV partnership channels ‘fresh financing to Maltese businesses’
The banks say this initiative is designed to enhance the working capital and investment capacity of Maltese mid-sized firms