Malta is poised to become the first European Union Member State to exit the Excessive Deficit Procedure ahead of schedule, after its fiscal performance in 2024 and early 2025 significantly outperformed budget targets. The Ministry for Finance confirmed that the national deficit for 2024 closed at 3.7% of GDP, an improvement of 0.8 percentage points on the 4.5% projected in the budget, while the debt-to-GDP ratio fell to 47.4%, well below the 55.3% forecast. Based on positive trends registered in the first months of 2025, the government has now revised the 2025 deficit forecast down from 3.5% to 3.3%, reinforcing its commitment to sound economic governance and fiscal responsibility. Minister for Finance Clyde Caruana said the National Statistics Office data reaffirmed the effectiveness of the government’s economic strategy, noting that the administration had reduced the deficit without compromising growth momentum or social well-being.
The European Commission opened an Excessive Deficit Procedure for Malta on 26 July 2024 after assessing that the deficit had breached the 3% reference value, and the Council issued a recommendation on 21 January 2025 with a view to bringing an end to the situation of an excessive deficit. The procedure is the EU’s corrective mechanism under Article 126 of the Treaty on the Functioning of the European Union, designed to ensure Member States return to or maintain budget discipline by respecting the 3% deficit and 60% debt reference values. For Malta, the Commission had set a deadline of 2027 to correct the imbalance, but the faster-than-expected consolidation now puts the country on track to have the procedure abrogated two years early.
Malta has been subject to the Excessive Deficit Procedure before. The Council previously adopted a decision on the existence of an excessive deficit in 2013 and abrogated it on 19 June 2015 after the country corrected its fiscal position. The current trajectory marks a similar correction, with the government citing responsible fiscal management, prudent decision-making, and stronger-than-expected revenue growth as drivers of the improvement. The early exit is being presented as a critical milestone in Malta’s economic trajectory, sending a signal of stability, discipline, and resilience to markets and EU institutions.
The European Commission is expected to reassess Malta’s budgetary situation later this year as part of its regular surveillance, and a formal Council decision to abrogate the procedure would follow if the deficit remains below the 3% threshold and the correction is deemed durable. If confirmed, Malta would be the first Member State to leave the procedure under the EU’s revised economic governance framework that came into force on 30 April 2024.
