Malta Fiscal Advisory Council

02/09/2026

📘The Malta Fiscal Advisory Council issues a Council Note, assessing Malta’s economic and fiscal performance during the first half of 2026, against the most recent official forecasts presented by the Ministry for Finance (MFIN) in April.

The Maltese economy remained resilient, with economic growth driven primarily by domestic demand. The Council considers the real GDP growth forecast of 3.7% for 2026 to remain broadly achievable.

On the fiscal side, while the first quarter of ESA data indicated relatively subdued growth for government revenue, more recent cash data point to better revenue performance.

⚠️ The principal fiscal risk relates to government expenditure. Spending grew significantly faster than revenue in Q1, with increases across all major expenditure categories. First-half cash data also point to expenditure growth of close to 18%. To remain within the annual target, expenditure growth would need to slow markedly during the remainder of the year.

Such developments contributed to an ESA deficit of €339.0 million in Q1, compared to the MFIN’s annual target of €428.6 million. The MFAC considers the 2026 economic growth forecast broadly achievable but sees risks to the fiscal balance tilted towards a higher-than-projected deficit unless expenditure growth moderates or revenues outperform expectations.

The Council issued two recommendations:
1️⃣ Contain expenditure growth and ensure adherence to the net expenditure path
2️⃣ Complete the transposition of Directive (EU) 2024/1265 without further delay

Read the full note here:https://mfac.org.mt/wp-content/uploads/2026/09/Council-note_Economic-and-Fiscal-Developments-During-the-First-Half-of-2026.pdf

25/08/2026

The Malta Fiscal Advisory Council’s Chairperson, Moira Catania and Chief Economist, Gilmour Camilleri, were interviewed by the Times of Malta on Malta’s competitiveness and the challenges facing the country’s economic growth.

During the interview, they highlighted that productivity growth has remained relatively slow when compared to the strong growth in wages and the wider economy, raising concerns about the implications this could have for Malta’s competitiveness and the sustainability of its economic growth.

The full article can be accessed through the link 🔗

Fiscal Council officials warn the country is becoming more expensive than its competitors

17/07/2026

An opinion piece written by Senior Economist Christian Xuereb drew on research from the recently published MFAC Assessment of the Fiscal Forecasts Underlying the Annual Progress Report 2026.

The article explores the implications of Malta’s growing reliance on current taxes on income and wealth as a source of public revenue.

🔗 Read the full article here:

Twenty-five years ago, that fig­ure was just €25. This marks a pro­found shift in the way the gov­ern­ment raises the rev­enue needed to fin­ance pub­lic expendit­ure, with import­ant implic­a­tions for the years ahead. The trans­form­a­tion reflects...

02/07/2026

In Box C of its latest “Assessment of the Fiscal Forecasts Underlying the Annual Progress Report 2026”, the Malta Fiscal Advisory Council examines the composition of government capital expenditure disaggregated between gross fixed capital formation (GFCF) and capital transfers.

🔎 This analysis highlights a recurring pattern in recent years:
- Public GFCF has consistently fallen short of forecasted levels
- Capital transfers have generally exceeded projections.

This suggests that, while capital expenditure outturns have remained broadly in line with forecasts, deviations in the underlying components have tended to broadly offset one another. Recent outturns indicate that part of the gap reflects both forecasting errors and the statistical reclassification of certain expenditure items from investment spending to capital transfers at the ex*****on stage.

Understanding these dynamics is important when assessing fiscal developments, as the economic impact and policy implications of direct public investment can differ from those associated with capital transfers.

Access the full Box here:
https://mfac.org.mt/wp-content/uploads/2026/06/box-c.pdf

01/07/2026

Last Friday, Chairperson Dr Moira Catania and Chief Economist Mr Gilmour Camilleri presented the Macroeconomic and Fiscal Outlook for 2025, along with the forecast for 2026, to members of the Malta Council for Economic and Social Development (MCESD).

The discussion centred on the importance of fiscal sustainability and the need to safeguard long-term economic growth through continued investment in productivity-enhancing measures.

MCESD Chairperson Ms Maria Micallef emphasised the value of maintaining regular engagement between the MCESD and the Malta Fiscal Advisory Council, highlighting how data-driven analysis can further strengthen social dialogue and support more informed policymaking.

L-imsieħba soċjali fi ħdan il-Kunsill Malti għall-Iżvilupp Ekonomiku u Soċjali (MCESD) iltaqgħu għal laqgħa li matulha l-Malta Fiscal Advisory Council (MFAC) ippreżenta analiżi dettaljata dwar ir-Riżultat Makroekonomiku u Fiskali tal-2025, kif ukoll it-Tbassir għall-2026. Dwar dan, iċ-...

30/06/2026

An opinion piece written by Economists Maria Giordmaina and Maria Grazia Briffa showcased the Council’s macroeconomic heatmap, which was recently featured in the MFAC’s Assessment of the Macroeconomic Forecasts Underlying the Annual Progress Report 2026.

The article explores what the data presented in the heatmap reveal about Malta’s economy and whether signs of cooling should be a cause for concern.

🔗 Read the full article here:

The country’s economic achievements over the past decade have been considerable, yet the next phase of development may prove more demanding than the last. Growth created Malta’s success story. Productivity will determine whether that success endures

24/06/2026

In Box B of its latest “Assessment of the Fiscal Forecasts Underlying the Annual Progress Report 2026”, the Malta Fiscal Advisory Council assesses the implications of Malta’s growing reliance on current taxes on income and wealth as a source of public revenue.

🔎 Key findings:
• The share of government revenue from current taxes on income and wealth has risen from around 25% in 2000 to over 43% in 2024–2025.
• This is now a main driver of revenue growth and Malta's reliance on this source of revenue is considerably higher than the EU (27%) and euro area averages (28%).
• Improvements in Malta’s fiscal balance has been strongly supported by robust performance in this revenue stream.

📈 The box also highlights key risks:
• A growing share of these revenues is increasingly driven by corporate income tax, which increases the exposure of public finances to fluctuations in corporate profitability, international investment decisions, and broader global economic developments.
• Malta’s openness and reliance on internationally oriented activity may amplify exposure to external shocks, competitiveness shifts, and changes in international tax frameworks.

❗ While this revenue structure has supported strong fiscal outcomes in recent years, the analysis underscores the importance of monitoring concentration risks and ensuring the long-term resilience of the revenue base.

Access the full Box through the following link:
https://mfac.org.mt/wp-content/uploads/2026/06/box-b.pdf

22/06/2026

Over the weekend, two opinion pieces drew on research published in the MFAC's Assessment of the Macroeconomic Forecasts Underlying the Annual Progress Report 2026.

Read the articles:

📌 Tomorrow's prosperity needs a new growth model – written by Chief Economist Gilmour Camilleri
https://timesofmalta.com/article/tomorrow-prosperity-needs-new-growth-model.1130125

📌 The economic implications of the Middle East conflict for Malta – written by Senior Economist Andrea Mallia
https://www.independent.com.mt/articles/2026-06-21/business-news/The-economic-implications-of-the-Middle-East-conflict-for-Malta-6736290632

22/06/2026

📘 The Malta Fiscal Advisory Council (MFAC) published its “Assessment of the Fiscal Forecasts Underlying the Annual Progress Report 2026”.

On 17 June 2026, the MFAC submitted its report to the Minister for Finance, confirming that, based on the data available at the time, it assessed the government's fiscal forecasts for 2026 as presented in the Annual Progress Report 2026 (APR26) to lie within its endorsable range and to be consistent with the assumptions outlined in the official document.

🔎 Key highlights:
• Malta's fiscal performance in 2025 was significantly stronger than previously forecasted, with the general government deficit declining to 2.2% of GDP, below both the 3.3% DBP target and the 3.0% Maastricht reference value.
• The Ministry for Finance projects the deficit to decline further to 1.6% of GDP in 2026, while the debt-to-GDP ratio is expected to fall from 46.4% to 45.8%.
• Malta is expected to remain compliant with the Maastricht deficit and debt criteria, with the European Commission having recommended the abrogation of Malta's Excessive Deficit Procedure (EDP).
• While annual net expenditure growth is projected to remain within the limits established under Malta's Medium-Term Fiscal-Structural Plan, cumulative deviations from the agreed expenditure path continue to exceed the threshold established under the control account mechanism.
• The Council identifies broadly balanced risks on the revenue side and upside risks to expenditure, particularly in intermediate consumption and social payments, suggesting that the projected improvement in the fiscal deficit could be more limited than currently envisaged.

The Council also issued three strategic recommendations:
1️⃣ Strengthening the resilience and sustainability of Malta's revenue base.
2️⃣ Aligning the Fiscal Responsibility Act with the revised EU economic governance framework through the transposition of Directive (EU) 2024/1265.
3️⃣ Using fiscal policy as a strategic enabler to address long-term structural challenges by supporting productivity-enhancing investment.

Access the full report through the following link:

16/06/2026

📈 Malta has one of the fastest growing economies in Europe, but what is driving this growth; higher productivity or labour force expansion?

In Box C of its latest “Assessment of the Macroeconomic Forecasts Underlying the Annual Progress Report 2026”, the Malta Fiscal Advisory Council presents a decomposition of Malta’s economic performance, distinguishing between the contribution of productivity gains and labour force expansion.

The findings suggest that Malta’s strong economic performance over the past decade has been driven primarily by labour force expansion, supported by rising participation rates, particularly among women, and net migration. Meanwhile, productivity gains have remained comparatively modest.

🔎 Key findings:
- Maintaining current trends: To sustain real GDP growth of around 4% annually while productivity continues to grow at its average pace of the last decade, Malta would need to expand its labour force by approximately 14,000 people every year.

- Stronger productivity growth: If labour productivity growth accelerated to 3.0% per year, while GDP growth remained at 4.0%, the required annual labour force expansion would fall significantly to around 6,000 people.

As pressures on infrastructure, housing, and public services continue to grow, the findings suggest that Malta's future economic success may increasingly depend on achieving stronger productivity gains rather than relying primarily on labour force expansion.

Access the full Box here:
https://mfac.org.mt/wp-content/uploads/2026/06/Population-Increases-versus-Improvements-in-Labour-Productivity.-Who-did-the-heavy-lifting.pdf