The country’s deficit has fallen below the 3% EU threshold earlier than originally forecast, Prime Minister Robert Abela told Parliament on Monday, arguing that stronger-than-expected revenue had allowed the government to outperform its own conservative projections.

Addressing Parliament during the debate on the Budget Implementation Measures Bill, Abela said Finance Minister Clyde Caruana had initially adopted cautious revenue estimates, only to revise them after government income exceeded expectations.

During the parliamentary questions session, Caruana said that the 3% deficit mark would not only be reached, but would fall below the 3% mark.

Caruana said that during the Budget for 2026 last October, he had said that Malta will reduce its national budget deficit to below 3% of its total production in 2026, however, indications showed that this was already accomplished in 2025.

Abela said that the deficit had already been reduced further than planned just months after the Budget was presented.

“The situation is exactly the opposite of what the Opposition is claiming,” Abela said, adding that while previous administrations had underestimated deficits due to over-optimistic revenue forecasts which never materialised, the current government had exceeded its targets.

He said this would allow the government to continue investing in families and businesses in the next Budget.

Abela described the 2026 Budget as “the strongest in Malta’s history,” saying it provided €9.3 billion in allocations alone, excluding tax cuts, a figure he said would rise beyond €9.5 billion when all measures were accounted for.

He contrasted this with past budgets, which he said had been “three times smaller,” despite claims of economic superiority by former governments.

Referring to repeated global shocks - including the pandemic, inflation and two wars, Abela said his government had still delivered every measure promised in its electoral manifesto, and more.

He accused the Opposition of promoting austerity-style politics, arguing that previous governments had used economic crises as justification to withhold support.

“The politics of pulling the handbrake is not what people want,” he said, pointing to five years of economic stagnation and rising unemployment under past administrations.

On housing, Abela acknowledged ongoing challenges for youths to become homeowners, but said government schemes had enabled even more people to become homeowners.

He accused previous administrations of dismantling protections in the rental market, particularly for pre-1995 leases, and said reforms introduced by the Labour government had restored justice to tenants despite Opposition resistance.

Turning to pensions, Abela criticised what he described as an arbitrary distinction introduced under a previous government based on year of birth, which resulted in pensioners born before 1962 receiving less.

He said this injustice had been addressed after discussions with Ministers Michael Falzon and Clyde Caruana, with pension allocations now exceeding €100 million more than in past budgets.

He said the minimum pension was now higher than the maximum pension had been in 2012, adding that pensioners are receiving more COLA increases and additional benefits.

Abela said similar principles guided tax policy, noting that workers no longer paid tax on the first €1,000 of monthly income, and that family tax cuts had been expanded.

The Prime Minister challenged the Opposition to name another country offering comparable student support, pointing to stipend increases, free education, a €10,000 first-time buyers’ grant for young people, and annual €500 education support for parents whose children continued their studies.

He said Malta had avoided the political instability seen elsewhere in Europe, citing countries such as France, Spain, Austria and Belgium, where governments had struggled to pass budgets or introduced austerity measures including tax hikes, pension freezes and cuts to social services.

Abela spoke of the imminent launch of Malta Vision 2050, which he said will be in the coming days, with a first phase running to 2035.

He said the strategy would prioritise human development, digital transformation and environmental sustainability, aiming to place Malta among the world’s top 10 countries in health and education achievements.

Abela said recent budgets had already invested heavily in green spaces and regeneration projects, and now, government has promised and will deliver on Fort Tigné, Fort Campbell, Manoel Island and White Rocks, alongside free laptops for students, increased in-work benefits, higher children’s allowances and improved access to IVF services.

“We showed what works and who doesn’t,” Abela said, arguing that sustained investment, rather than austerity, was securing long-term economic stability and future prosperity.

“A strong economy, a future for our children,” Abela said.