Malta on track to be first EU country to exit excessive deficit

Malta is poised to become the first EU member state removed from the Excessive Deficit Procedure in the current round, with the European Commission expected to recommend closing proceedings against the country on Wednesday. 2% of GDP in 2025, clearing the EU's 3% threshold two years ahead of the deadline set under its EDP obligations.

When the procedure was launched in 2024, Malta was grouped with six other countries — Belgium, France, Italy, Hungary, Poland and Slovakia — and is set to be the sole member of that cohort to depart the procedure at this stage. The Commission's recommendation does not take immediate effect. The decision must still be ratified by ECOFIN, the EU council that convenes finance ministers from across the bloc, with a vote pencilled in for July — a step widely regarded as a formality.

7% of GDP in 2020, when the government deployed the Covid-19 wage supplement and other emergency supports. Even after the acute pandemic phase passed, public finances remained stretched by the Stabbiltà scheme, designed to shield households and businesses from rising energy costs. Both the European Commission and the IMF repeatedly pressed Malta to phase out those subsidies more quickly.

5%. The revised picture proved considerably better. 2%, representing the first occasion Malta had come in under the EU's 3% limit since the pre-pandemic era, and indicated at that point that an EDP exit before the end of summer was a plausible outcome.

Under the 2025 recommendations attached to its EDP status, Malta had been required to bring the deficit below 3% by 2027 while maintaining tighter control over public expenditure, a deadline it has now beaten by two years. Under EU fiscal rules, countries that fail to meet EDP targets risk financial penalties and restrictions on government spending.

1% by 2027. The Maltese government's own targets are more ambitious: a full balancing of the books by the end of the decade.