Finance ministry

The Accountant General has announced the issue of another round of up to €220 million in Malta Government Stock, even as concerns about Malta’s burgeoning debt mount.

On Tuesday, the Ministry for Finance released a notice announcing the issue of €140 million of Malta Government Stock, subject to an over-allotment option of an additional €80 milion.

The stock will be split as follows:

  • 0.40 per cent Malta Government Stock 2027 (IV) Fungibility Issue (F.I.); and
  • 1.00 per cent Malta Government Stock 2035 (II) Fungibility Issue (F.I.); and
  • 2.00 per cent Malta Government Stock 2051 (II); or
  • any combination of the above three stocks

Applicants may submit sealed bids (auction) for a minimum of €500,000 and multiples of €100,000 each.

Applications open on Wednesday 22nd September 2021 at 8.30 a.m. and close at noon (CET) of the same day or earlier at the discretion of the Accountant General.

The application forms may be obtained from all members of the Malta Stock Exchange and other authorised Investment Service Providers or downloaded from the Treasury’s website.

The allotment results of each Stock will be determined and announced two hours after the closing time of the auction.

The Accountant General will announce indicative pricing guidelines for each stock through a press release to be published on Monday 20th September 2021. These consist of an indicative spread over the corresponding euro mid-swap rate, broadly reflecting the secondary market conditions with respect to the 0.40% Malta Government Stock 2027 (IV), the 1.00% Malta Government Stock 2035 (II) and the 2.00% Malta Government Stock 2051 (II).

More information on these Stocks can be found in the Offering Circular which together with the General Prospectus and Malta Government Stocks Regulations can be downloaded from the Treasury’s website.

A debt-fuelled recovery

Malta’s debt has ballooned during the pandemic.

National Statistics Office figures show that by the end of July 2021, Central Government debt stood at €7,848.4 million, a €1,224.2 million rise from 2020, with Malta Government Stock issues making up a majority of this.

In fact, increases reported under Malta Government Stocks (€857.9 million) were the main contributors to the rise in debt, with most of the rest of the increase in debt coming from the €420 million EU loan from the temporary Support to mitigate Unemployment Risks in an Emergency (SURE) instrument

How much of the Stock is being bought up by the European Central Bank (ECB) is unknown, but NSO figures give an indication that this is likely to be a high figure – Government debt held by foreign entities stood at €687 million in 2017, rising significantly to €864.9 million by the end of 2019. However this ballooned to €1.26 billion over 2020.

Last week, the ECB announced that it would be “moderately” slowing down its emergency purchasing of sovereign debt, with a target of €60 to €70 billion per month. The Pandemic Emergency Purchase Programme is anticipated to end by March – the effect on Government’s ability to borrow remains to be seen.

Malta is not alone in relying on debt – global debt as a percentage of GDP was found to have reached a staggering 355 per cent by the end of 2020.

The pandemic hit Government finances hard – in April, Minister for Finance Clyde Caruana estimated that it was costing the state purse €5 million a day. This was broken down into additional expenditure of €3 million and loss of revenue of €2 million.

With the COVID-19 stimulus estimated to account for almost half of all GDP growth in 2021, Government is unlikely to cut back as long as borrowing remains cheap.


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