Malta Set To Become First Country To Exit EU Excessive Deficit Procedure

Malta is set to exit the European Union’s excessive deficit procedure, becoming the only country expected to be removed from the financial monitoring mechanism this year. The European Commission is expected to recommend the closure of proceedings against Malta on Wednesday after the country successfully brought its deficit back below the EU’s 3% threshold. The move marks a major turnaround from just two years ago, when Malta was placed under the excessive deficit procedure alongside Belgium, France, Italy, Hungary, Poland and Slovakia after recording a deficit of 4.9% of GDP. Under EU rules, member states are expected to keep their deficit below 3% of GDP. Countries that fail to do so can face increased scrutiny and, in some cases, financial penalties if they do not take corrective action. Malta’s public finances came under significant pressure in the years following the COVID-19 pandemic. The country’s deficit peaked at 8.7% in 2020 as the government rolled out support measures, including the wage supplement scheme, to protect jobs and businesses during the crisis. In the years that followed, costly measures such as energy subsidies and the Stabbiltà scheme continued to weigh on public finances, prompting repeated calls from international institutions to scale back spending. Despite those pressures, Malta managed to reduce its deficit faster than expected. While projections initially placed the deficit at 3.5% in 2025, former Finance Minister Clyde Caruana announced in April that it had fallen to 2.2%, marking the first time Malta dropped below the EU threshold since before the pandemic. The European Commission had previously recommended that Malta bring its deficit below 3% by 2027. Reaching that target years ahead of schedule has now paved the way for the country’s exit from the procedure. The recommendation must still be formally approved by the Economic and Financial Affairs Council (ECOFIN) when EU finance ministers meet in July. However, the approval is widely expected to be a formality. According to the European Commission’s latest forecasts, Malta’s deficit is expected to remain under control over the coming years, dipping slightly to 2.1% by 2027. Government projections are even more ambitious, with Malta aiming to balance its books completely by the end of the decade. If confirmed next month, Malta will become the only EU country to successfully exit the excessive deficit procedure this year. What do you make of these statistics? •