Record Borrowing Puts Malta on Unsustainable Fiscal Path
Malta's national debt has reached a staggering €11.4 billion, with new figures laying bare the scale of borrowing under Prime Minister Robert Abela's watch. According to data released by the National Statistics Office, the country accumulated nearly €2.5 million in new debt every single day during 2025 alone [1].
The numbers are stark. Over the course of last year, Malta borrowed €893 million in fresh debt, pushing the total from €10.47 billion at the end of 2024 to €11.36 billion by the close of 2025. For the Nationalist Party's shadow finance minister Adrian Delia and shadow economy minister Jerome Caruana Cilia, the figures represent an alarming departure from Malta's recent fiscal history [1].
"Robert Abela is responsible for half of this entire debt," the opposition said in a statement. "He has borrowed more than all previous prime ministers – Labour and Nationalist – combined." When Abela took office from Joseph Muscat, national debt stood at just over €5 billion. It has now more than doubled [1].
Interest Payments Spiral: Nearly €1 Million Per Day
What worries fiscal watchdogs most is not just the debt itself, but the mounting cost of servicing it. Malta paid €297 million in interest on public debt during 2025 – an increase of €35 million from the previous year. That translates to approximately €814,000 per day drawn directly from taxpayers' money [1].
The trajectory is set to worsen. Government projections in the 2026 budget forecast interest payments rising to between €340 million and €350 million this year, crossing the threshold of €1 million per day in interest costs alone [1].
"The high level of deficit and debt imposed on the people by Robert Abela means that since becoming prime minister, he has borrowed more than all previous prime ministers – Labour and Nationalist – combined." – Adrian Delia and Jerome Caruana Cilia, PN
Spending Outpaces Revenue by Three to One
The underlying problem is straightforward: Malta is spending money faster than it earns. In 2025, government expenditure reached €8.896 billion against revenue of €8.072 billion, producing a deficit of €824 million – nearly double the €433 million deficit recorded in 2024 [1].
While revenue grew by €212 million year on year, expenditure surged by €604 million – almost three times as fast. This spending trajectory, the PN argues, far exceeds what the economy can sustain [1].
EU Pressure Mounting as Debt Forecasts Worsen
Malta remains under the European Union's Excessive Deficit Procedure, a formal enforcement mechanism triggered in July 2024 after the country breached EU fiscal limits. When finance minister Clyde Caruana claimed last April that Malta would exit the procedure early, few believed it would happen this quickly. The latest NSO figures confirm it has not [1].
Looking ahead, the picture darkens further. Government projections in the 2026 budget forecast debt rising to over €14 billion by 2028. That would mean Abela had tripled the debt inherited from his predecessors within a single parliamentary term [1].
The European Commission already warned in November that Malta's budgetary plan was "at risk of material non-compliance" with EU fiscal rules, citing cumulative expenditure growth far exceeding recommended ceilings. The government's own Fiscal Advisory Council has reportedly cautioned against "unproductive expenditure," while the Malta Chamber of Commerce has echoed warnings from rating agencies that "fiscal discipline and governance reform" are essential for long-term resilience [1].
Government Defends Strategy as Election Looms
Despite these warnings, the Abela administration shows no sign of changing course. Credit rating agencies have maintained Malta's 'A' grade with stable outlooks, though DBRS Morningstar cautioned that the "slow pace of fiscal consolidation – driven by sustained public expenditure, energy subsidies and income tax cuts – risks undermining the country's fiscal trajectory" [1].
Speaking at a campaign-style news conference this week, Abela doubled down on his spending strategy, vowing to "keep incentivising more, not tightening belts" and arguing that a strong economy would generate greater revenue to pass further benefits to the public. The government consistently points to reaffirmed credit ratings and Malta's robust economic growth as evidence that its approach of avoiding austerity during global turbulence has been vindicated [1].
But with debt and interest payments climbing sharply, and EU oversight tightening, Malta faces a growing credibility test. The question now is whether the government's gamble on growth-led spending will prove sustainable – or whether the mounting debt burden will eventually force the fiscal reckoning it has so far avoided [1].