VALLETTA (MALTA) (ITALPRESS/MNA) – Malta’s general government deficit more than doubled to €698.5 million in the first half of 2026, exceeding the full-year shortfall recorded in 2025, official figures showed.
The National Statistics Office reported a second-quarter deficit of €344.1 million, following €354.4 million in the first quarter.
Government revenue rose 10.8% year-on-year to €2.18 billion in the second quarter, but expenditure increased faster, climbing 14.6% to €2.52 billion and widening the deficit by €109.2 million.
Government debt also rose, reaching €11.98 billion at the end of June, equivalent to 47% of gross domestic product (GDP). This represented an increase of €516 million over the quarter and €891 million year-on-year.
The figures contrast with Malta’s improved fiscal performance in 2025, when the deficit fell to €505.7 million, or 2.05% of GDP, from 3.53% in 2024, according to the latest Excessive Deficit Procedure notification.
Debt stood at €11.41 billion, or 46.26% of GDP, at the end of last year, remaining below the European Union’s Maastricht thresholds of 60% for debt and 3% for the deficit.
However, the 2025 improvement was largely driven by higher revenue. Government income increased by €831 million, while expenditure rose by €521.8 million, reducing the deficit by €309.2 million.
The trend has since reversed, with spending increases across several major categories contributing to the deterioration.
In the second quarter, compensation of employees rose by €60.8 million year-on-year, intermediate consumption increased by €87.6 million, social benefits climbed by €53.3 million and capital transfers rose by €47.2 million. Subsidies were the only category to decline, falling by €6.9 million.
The Malta Fiscal Advisory Council has warned that Consolidated Fund spending increased by nearly 18% in the first half of the year and must slow considerably for the government to meet its full-year deficit target of just over €428 million.
The cash-based Consolidated Fund deficit reached €379.2 million in the second quarter, compared with the lower accrual-based figure of €344.1 million after accounting adjustments.
Malta’s revenue structure also presents risks, with taxes on income and wealth accounting for more than 43% of government revenue. Corporate tax represents 41.7% of direct tax income, leaving public finances exposed to fluctuations in profits reported by internationally mobile companies.
Despite the deterioration, Malta retains fiscal room for manoeuvre, with its debt ratio still below the EU ceiling.
The government’s 2026 projections anticipate a deficit of 1.64% of GDP and debt equivalent to 45.75% of GDP. However, the first-half figures have raised doubts about whether those targets can be achieved.
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