VALLETTA (MALTA) (ITALPRESS/MNA) – An independent fiscal watchdog has urged the Maltese government to rein in rising expenditure, warning against further increases in what it described as “non-productive spending”.
In its annual report to Finance Minister Clyde Caruana, the Malta Fiscal Advisory Council said recent budgets have been marked by persistently high spending alongside permanent revenue-reducing measures.
While acknowledging the government’s commitment to keep the deficit below the EU’s 3% of GDP threshold and maintain debt well under 60% of GDP, the council raised concerns over how public funds are allocated.
It noted that improvements in the fiscal balance have largely been driven by strong revenue growth, cautioning that such conditions may not last if economic circumstances weaken.
The council recommended tighter spending controls to preserve fiscal space and allow flexibility for future adjustments, stressing the need to prioritise efficiency and long-term sustainability in public finances.
Labour market conditions remain robust, with employment rising by 3.9%, supported by continued immigration flows. Unemployment has fallen to historically low levels, hovering near 3%.
However, the report highlighted that Malta’s economic growth continues to rely heavily on domestic demand, fuelled by both private and government consumption, a trend expected to persist in the near term.
While this has supported short-term growth, the council warned of risks, including pressure on infrastructure, strain on public finances, and limited gains in productivity and competitiveness.
It reiterated the need to gradually shift towards a more export-oriented growth model, calling this transition a “pressing strategic priority”.
The council said boosting exports will require sustained investment in innovation, diversification, productivity, and the strengthening of competitive sectors.
Expanding Malta’s export market share, it added, is essential to enhancing long-term economic resilience and growth.
– photo DOI –
(ITALPRESS).
