The European Commission has recommended that Malta be removed from the European Union's Excessive Deficit Procedure (EDP), after the country reduced its budget deficit below the EU's 3% threshold earlier than expected, the government said Wednesday.
In a statement, the Maltese government welcomed the Commission's recommendation, describing it as recognition of the country's strong fiscal performance.
Malta's deficit fell to 2.2% of Gross Domestic Product (GDP) in 2025, significantly below the 3% limit set under EU fiscal rules. The country had been placed under the Excessive Deficit Procedure in 2024 when its deficit stood at 4.9% of GDP.
The government said the improvement exceeded the targets agreed with the European Commission and was achieved ahead of schedule.
According to Eurostat data cited by the government, the average budget deficit across the European Union stood at 3.1% of GDP, compared to Malta's 2.2%.
The statement noted that several EU member states continue to record deficits at or above the 3% threshold, including Belgium, France, Italy, Austria, Poland, Romania, Slovakia, Finland, Hungary, Bulgaria and Croatia. While Malta brought its deficit below the threshold last year, Bulgaria and Croatia exceeded the limit for the first time.
The government argued that the reduction in the deficit was driven by economic growth rather than austerity measures. It pointed out that Malta remained the only EU country last year not to increase prices for electricity, gas, petrol and diesel through state support measures.
The statement also highlighted that the fiscal improvement came despite what it described as the largest tax cut in Malta's history, alongside increases in pensions and social benefits.
The European Commission has also projected a further improvement in Malta's public finances in the coming years, the government said.
The government described the recommendation as another positive endorsement of its economic policies, arguing that sustained economic growth has enabled it to support families and businesses while strengthening public finances.
It added that the result provides a solid foundation for the implementation of its electoral programme, following the mandate it received in last Saturday's general election.
In a statement, the Labour Party said a Labour Government is the guarantee of a fairer distribution of wealth for everyone, thanks to a strong fiscal position that has now been formally certified by the European Commission.
The Labour Government, led by Prime Minister Robert Abela, has just received confirmation from the European Commission that it reached its fiscal targets well ahead of the agreed timeline, as the same European Commission has written to the European Council to remove Malta from the excessive deficit procedure. Today, Malta has a deficit of 2.2%, one of the lowest in the EU, while the European average stands at 3.1%.
The Labour Government achieved this strong financial position without imposing austerity, contrary to what the Opposition requested; including its leader Alex Borg, who only months ago claimed that energy subsidies were "short‑lived". On the contrary, the Labour Government not only ensured stability in energy prices but also kept fuel prices among the lowest by keeping them stable for six consecutive years.
This is in addition to major social investment, including increases in the Children's Allowance, pensions, and two consecutive tax cuts that benefited all families and workers, including single individuals. At the same time, the Government launched and will continue the Malta Aqwa project by increasing capital investment.
A new Labour Government, with its historic fourth consecutive mandate from the people, will remain focused on people's priorities and begin implementing the INT Malta electoral manifesto, which aims to improve people's wellbeing by 25%.
This will also be achieved thanks to a strong economy and a financial position that has now been certified by the European Commission as sound and expected to continue improving in the coming years, the PL said.