Navigating fiscal priorities and economic growth ahead of Budget 2026

As Malta prepares for the unveiling of its Budget 2026, Finance Minister Clyde Caruana recently faced a series of questions, during a pre-budget interview on 21 October 2025 with Times of Malta's editor-in-chief Herman Grech, that shed light on the government’s fiscal strategy, economic outlook, and key priorities. This article distils the main points from the interview.

Economic outlook and fiscal policy

Minister Caruana indicated that Malta’s economy is expected to maintain steady growth despite global inflation and geopolitical uncertainties. Key sectors contributing to this growth include tourism, financial services, and technology.

The government intends to pursue fiscal discipline by reducing the public debt ratio, currently near 50% of GDP, through a combination of controlled expenditure and revenue measures. Deficit is expected to drop, from 3.3% this year (2025) to 2.8% in the coming year.

Cost of living adjustment (COLA) is expected to be less than €5 for 2026.

Spending

The upcoming budget will allocate additional resources to social welfare, particularly healthcare and education. Planned increases in healthcare funding aim to improve infrastructure and service delivery. Education investments will focus on enhancing quality and accessibility.

Pensions

When asked whether Malta will be introducing mandatory occupational pension schemes, an announcement made in the 2025 Budget speech, the Minister shared that talks are still underway.

The Minister hinted that state pensions will be increased, beyond the mere rise in the cost-of-living allowance.

Taxation and incentives

Whilst no new taxes are expected, the Minister spoke on the need to balance competitiveness with fairness. It was indicated that the budget is expected to include provisions to support families.

Reforms are expected with the aim of supporting employers in becoming more capital oriented through incentives to drive capital investment.

This summary reflects the statements made by Finance Minister Clyde Caruana during the pre-budget interview hosted by Times of Malta.

For further details on the Malta Budget 2026 and its potential implications, please visit Deloitte Malta’s dedicated Malta Budget 2026 page.