Prime Minister Robert Abela believes that the next phase of Malta's economic growth must be driven increasingly through boosted productivity, innovation, and better uses of technology such as artificial intelligence.

The Prime Minister said this while giving his keynote address at this year's EY Future Realised Conference at the Mediterranean Conference Centre, in Valletta, on Wednesday morning.

During his speech, Abela said that his government's ambition is not just to ensure that Malta remains an attractive investment destination, but to see that the investment it attracts helps improve quality of life in the Maltese islands. He added that this year's annual budget, Budget 2027, occurring next Monday, will represent another step towards this strategic direction.

The Prime Minister said that Malta has a unique opportunity to drive economic growth through these three facets.

He said that in doing so, businesses would be assisted to do more with the resources they currently have, employees could be allowed to focus on doing higher-value activities, more reskilling and upskilling efforts would be undertaken, and new opportunities for economic growth would be created "without placing additional pressures on our infrastructure and our existing resources."

PM Abela stressed that these changes, partly through the use of AI, would result in evolving Malta's economic model - not doing away with it. Here, he reiterated that, in his view, Malta should not "change or throw away an economic recipe that is giving us results."

He also acknowledged the survey's identified struggle that businesses face to find specialised skills/talent in Malta - a trend that has repeated itself, without significant change, across consecutive EY surveys along recent years.

PM Abela stated that the country must address this "major challenge" and find solutions for it.

He noted EY's findings for this year to be very encouraging, stating that "investors continue to trust and believe in Malta" - especially given the pandemic and wars that that have forced the Maltese government to adapt its fiscal policies. After expressing satisfaction on Malta garnering an 81% attractiveness result this year, he made clear that investor confidence "can never be taken for granted."

Abela spoke proudly of the survey result that nine out of every 10 companies surveyed intend on retaining or expanding their operations in Malta over the next year, calling this "a very powerful vote of confidence in Malta."

"There is no greater testament than that businesses here are willing and ready to keep investing in the country," he said.

During this speech, PM Abela mentioned that at the recent WTTC Summit earlier this month, CEOs had pledged to invest a further €2 billion in Malta's hospitality sector.

Abela was also happy that investors see AI as Malta's single sector with the highest long-term potential and a key driver for economic growth in the years to come. He said that this survey result confirms the direction being pursued by his government to promote AI technology around the country in recent years, with this government backing aligning to where investors see the largest opportunities.

The Prime Minister stated that his government wants AI to be available to all people and businesses in the Maltese islands and referenced the €100 million sum committed to Malta's digital transformation and the AI4All initiative from last year's budget as evidence of this.

He said that even though AI is emerging rapidly as a technology around the world, "I firmly believe that Malta has what it takes to not simply respond to change in a reactive manner, but to shape change and the future, and also to turn change and challenges into opportunities."

'The negative impact of removing subsidies would be greater than maintaining them,' PM says

Prime Minister Robert Abela dedicated ample time to his speech on Wednesday morning to discuss the importance in his government continuing to pay out its energy and fuel subsidies.

He stressed that "the negative economic impact of removing the subsidies would be considerably greater than the cost of maintaining them."

PM Abela stated that around 1.4% of the national GDP is being used to finance these energy subsidies, though government estimates indicate that withdrawing these subsidies would lead to a GDP retraction of approximately 2.2%.

After noting that the Maltese government has already spent €400 million to finance these subsidies this year, so households and businesses do not pay off the difference brought about through price hikes, and that it is expected to spend another €400 million on them next year, national finances remain healthy and stable. He said that despite these costs, Malta's burden of debt is still hovering between 45-50%. With this significantly below the EU's 60% threshold, the Maltese government has the "physical headroom" required to take this action.

Abela said that Malta is unique in having this fiscal leeway, and that tighter fiscal positions is the reason why other EU countries have not yet implemented the same measure themselves, and cannot. He pinpointed this to other countries' comparatively higher national debt figures and budget deficits.

Prime Minister Abela also assured that Malta's budget deficit will remain under the 3% mark as it continues to finance these subsidies. He also mentioned sustained positive credit ratings as further evidence of Malta's healthy financial environment.

"The energy subsidies are there and they will remain there," the Prime Minister pledged.

Abela added that even though he and other politicians have experienced several sleepless nights due to emerging geopolitical situations, with them impacting energy and inflation prices worldwide, Malta's fiscal policy will continue protecting consumers and businesses from the subsequent financial burdens of war, as "they are not to blame for what is happening around the world."

"I have always argued that economic stability is an essential element of a healthy country that businesses continue to keep investing in, not something we say we just must do," PM Abela said.

He noted that when families have peace of mind, they consume with confidence, and that, as seen in Malta in recent years, with turmoil after turmoil arising, the economy is better positioned to continue growing sustainably. Abela said that this is why Malta's economy is forecasted to keep increasing at a rate of 4% per annum and that with this growth, his government can distribute substantial revenue "equitably among our people and to keep supporting our businesses."