In the Budget 2023 document, it was revealed that tax credits will be introduced on particular activities which support businesses and families, and that invest in sustainability and digitalisation.

He said that plans were to reduce income tax, however, because of the current global crisis they had to focus on other priorities. He clarified that this will happen when the time is right.

He also said that reducing the income tax at this time round would send conflicting messages to the economy because the European Central Bank is moving towards a tight monetary policy to curb inflation. He said that the planned tax reductions (which are not being implemented this year) would have left €510 in a family’s pockets, but the government’s energy policies have now left an extra €1,300 in that same family’s pocket from their savings on energy bills, and a further €700 in fuel expenses.

In real terms in 2022, the economy is expected to grow by 6%, with domestic demand being the largest contributor to the economy’s growth at 4.4%.

In 2023 the economy is expected to increase by 3.5% in real terms, and 7.3% in nominal terms. Domestic demand will still be the largest contributor at 2.5%, with net exports contributing 0.9%. Caruana explained that the percentage of net exports is so small because of global factors which are out of the government’s control.

Also, in 2023 private consumption is expected to grow by 4%.

Considering the state of the global economy and the decrease in exports, the exports will grow at a slower rate of 2.5%. Imports are expected to grow by 2%.

He explained how following the global pandemic, the economy grew by 10.3%, which is 4.9% more than the EU average.

He also revealed that the Maltese economy is expected to maintain this momentum in the second half of the year, albeit at a slower rate.

It is expected that in 2022 there will be a 4% growth in employment, whilst the unemployment rate will be 3.1%.

Next year there should be an increase of 3.4% in employment, whilst the unemployment rate will remain at 3.1%.

Inflation is expected to reach 5.7% mainly because of the increase in the prices of food and services. If the government did not offer subsidies, then the inflation rate would be around 12.8%.

Inflation is expected to drop to 3.7% in 2023. The prices of food and services are expected to rise, but at a much slower rate.

The deficit is expected to decrease from 7.8% to 5.8%. For the following year, it is expected to remain around the same at 5.5%, and it is expected to be lower than 3% in 2025.

The budget document revealed that it had collected €120 million from the work done by the department of internal revenue, where the tax commission collected this money from taxes which were not paid on time.

Public debt as a proportion of the gross domestic product (GDP) is expected to stand at 57% in 2022, which is less than the European average of 60%. The government’s goal is to keep this close to or lower than 60%. It is expected that after 2024 the percentage will start to decrease.

He clarified that the percentage of public debt paid has to do with the burden that the family can afford with their income.

He explained that a family with, for example, €2,000 in debt and their income is €20,000, they will pay 10% of their income. However, a family €3,000 in debt with an income of €40,000, will pay 7.5%.

He said that the percentage of the GDP ratio has remained the same for a number of years.