Malta's Finance Minister Clyde Caruana has disclosed that the government's cumulative energy subsidy bill has reached around €1.35 billion, comfortably exceeding the roughly €800 million spent on pandemic-related measures and making energy support the single largest exceptional strain on the public finances in recent memory.
Caruana made the remarks at a Times of Malta pre-Budget debate, arguing that the scale of the burden was poorly understood by the public and that the government needed to do considerably more to explain it. As reported by Malta Business Weekly, he put expected subsidy spending at around €400 million for this year and a further €400 million for 2026, with this year's figure having risen well above original forecasts due to a prolonged regional conflict and deteriorating external conditions.
The minister acknowledged that blanket subsidies are an imperfect instrument, estimating that around €20 million was flowing to people who did not require support. Even so, he ruled out any unwinding of the current arrangements. His concern was economic confidence: households might pre-emptively cut spending if they feared higher bills, and businesses could scale back investment, producing knock-on damage that would outweigh any savings.
On the deficit, Caruana confirmed Malta expected to close 2025 at 2.8 per cent of GDP, a level he anticipated holding broadly steady through to 2027. He attributed roughly half of that figure, around 1.4 per cent of GDP, directly to energy subsidies, and argued that the underlying fiscal position remained relatively sound once that extraordinary item was stripped out.
Zooming out to the broader debt picture, he acknowledged that national debt had risen by approximately €6 billion in absolute terms since 2020, though he pointed to a debt-to-GDP ratio of around 46 per cent as evidence that the position remained manageable. Around 70 per cent of that increase, he said, traced back to three specific shocks: the pandemic, energy subsidies, and the closure of Air Malta alongside the launch of KM Malta Airlines.
Caruana also struck a sceptical note on the proposed light rail project, saying he had yet to see the underlying studies and remained unconvinced the numbers worked. On other fiscal questions, he confirmed no plans to adjust VAT, income tax, or social security contributions, declined to rule out higher tourist taxes, and said he fully backed the government's €1,000 super bonus scheme, which he described as a tax cut delivered through an alternative mechanism. Whether it would feature in the forthcoming Budget, he left open.
