Finance Minister Clyde Caruana announced that COLA payments will increase by €6.41 per week during his Budget 2027 speech on Monday evening.

The Minister for Finance said that Malta's inflation rate this September was recorded at 2.4%, while inflation in the Eurozone overall was registered at 3.8% during the same period last month. In addition, the Ministry for Finance forecasts inflation in 2026 to stand at 2.5% and for inflation to rise by an additional 2.7% in 2027.

He announced the COLA increase of €6.41 per week while stating that Malta's inflation rate remains lower than the rest of the Eurozone (other EU countries, combined, that use the euro (€) currency).

Minister Caruana said that in 2025, the Maltese economy grew by 4.7% in real terms and that in the first half of 2026, this reached as high as 4.4%. In comparison, the EU's average economic growth stood at 1.2%, he said. During the same period, family consumption rose by 3.4%, investment by 8.2%, jobs overall have risen in quantity by 4.6%, and employee compensations are also up, by 5.1%.

"We are prudently forecasting real economic growth of 4.1% in 2026, and 3.8% in 2027," Minister Caruana said.

Minister Caruana stated that the government has decided to retain its energy and fuel subsidies, reiterating their importance to the Maltese government's fiscal policy.

He said that if it had to do away with the subsidies immediately, diesel prices would rise from €20 to €33.06 per week per car, while electricity prices would go up from €50 to €85 per month, meaning that a household with two diesel cars would save €2,000 per year through the subsidies, he said.

"Government expected to spend €392 million on energy subsidies this year. Over the years, between 2022 and 2026, these subsidies amounted to €1.35 billion," Minister Caruana said.

According to an internal simulation carried out by the Ministry for Finance, electricity prices would increase by 70% and fuel prices by 65% if the energy subsidies had to be removed at once this year.

He added that, in this simulated scenario, real GDP would be 0.9% below Malta's baseline scenario with the subsidies after the first year and 2.2% below baseline trends by the third year. In addition, consumer prices would be 4.9% higher after one year and 2,600 more people would be unemployed after three years.

"This is not a prediction of what will happen, but a clear warning of what could happen without this protection. The cost-of-living compensation for employers would shoot up to €18.05 per week," he said.

Private consumption is also expected to rise by 3.9% this year and by another 3.8% next year. He added that investment is projected to increase by 10.2% in 2026 and by another 7.0% in 2027, while unemployment rates should remain low, at 3.3% for 2026 and 3.2% in 2027.

Exports are also set to rise by 2.0% next year.