MALTA/IMF Executive Board Concludes 2025 Article IV Consultation with Malta

IMF Executive Board Concludes 2025 Article IV Consultation with Malta

FOR IMMEDIATE RELEASE

Malta’s robust economic performance has continued despite global uncertainties, maintaining growth rates that exceed the EU average, inflation levels near the ECB target, and a sustainable public debt.
Growth is expected to slow to its potential rate of 4 percent due to structural challenges as labor-led expansion, supported by immigration, moderates, and gaming and tourism sectors reach saturation.
Policy priorities focus on further strengthening fiscal buffers for future shocks while creating room for investment in infrastructure, human capital, and innovation. Long-term growth will depend on reforms that boost productivity and address structural challenges.

Washington, DC – February 6, 2026: On February 4, 2026, the Executive Board of the International Monetary Fund (IMF) completed the Article IV Consultation for Malta.^[1]Malta’s economy has maintained robust momentum, with annual growth averaging nearly 7 percent over the past decade led by tourism, online gaming, and professional services alongside significant inflows of foreign workers. GDP growth is estimated to have slowed to 3.9 percent in 2025, which is still considerably higher than the EU average. The influx of foreign workers that fueled economic activity in the past has also strained infrastructure and public services, highlighting the limits of the current labor-intensive growth model. This labor-driven growth is expected to continue in the medium term, but slow in longer term since Malta cannot sustain a continued population increase. Inflation declined to slightly above 2 percent while fiscal consolidation has kept public debt on sustainable path. The financial sector remains sound and well-capitalized.

Executive Board Assessment^[2]

Executive Directors commended the authorities’ sound macroeconomic management with Malta enjoying one of the highest growth rates in Europe over the past decade, and public debt on a sustainable trajectory. Noting that risks are tilted to the downside and Malta’s labor‑intensive growth model appears to be approaching its limits, Directors emphasized the importance of transitioning toward a more productivity‑driven growth path, while preserving macroeconomic stability.

Directors welcomed the narrowing fiscal deficit and the authorities’ commitment to the EU fiscal framework. They agreed that fiscal consolidation efforts should be sustained to maintain public debt at current levels and create fiscal space for investments in human capital, infrastructure, and innovation. Directors also saw scope to enhance revenue mobilization, including through continued digitalization of tax systems, and improvements in VAT administration and corporate taxation. Strengthening public financial and investment management remain important. Recognizing the authorities’ social objectives, Directors recommended gradually phasing out untargeted electricity and fuel subsidies while protecting vulnerable groups.

Directors welcomed the strength of the banking sector citing high capital and liquidity buffers and low non‑performing loans. They urged vigilance on vulnerabilities from rising exposures to real estate and on the growing role of non‑bank financial institutions, digital finance and crypto‑asset providers. Directors welcomed the planned expansion of macroprudential measures and encouraged continued strengthening of financial sector supervision, data availability, and stress‑testing. Noting the progress made, they encouraged the authorities to sustain progress in strengthening the AML/CFT framework.

Directors underscored that advancing structural reforms is essential to sustaining high growth. They emphasized the importance of addressing labor shortages and persistent skills mismatches alongside stepped‑up investment in infrastructure and technology to support increasingly higher value‑added activities. In this context, they welcomed the authorities’ new migration and education strategies and emphasized the importance of improving judicial efficiency and sustaining progress in digitalization and innovation. Directors welcomed efforts in strengthening energy security and climate resilience and encouraged continued progress toward the green transition.

Malta: Selected Economic Indicators, 2024–27


	2024	2025	2026	2027
		Est.	Proj.


Real economy (% change)

Real GDP (expenditure)	6.8	3.9	3.9	4.0
Domestic demand	5.9	4.7	4.3	4.3
Output gap (% potential output)	1.2	0.8	0.5	0.4

Gross national savings (% GDP)	26.1	25.5	24.2	24.2
Investment (% GDP)	19.0	19.1	19.0	19.0

Prices (% change)

Consumer prices (HICP, avg)	2.4	2.4	2.0	2.0
Consumer prices (HICP, eop)	1.8	2.2	2.1	2.0

Labor (% change)

Employment	5.6	2.0	2.1	2.2
Wages	4.5	4.3	3.8	3.8
Unemployment rate (%)	3.2	2.5	2.5	2.5

Net migration (% population)	1.8	1.8	1.7	1.7
Unit labor costs	2.0	-0.3	-0.3	-0.2

Financial sector

Credit to the private sector (% change)	6.9	5.4	5.8	5.6
Credit to the private sector (% GDP)	66.5	66.2	65.5	65.2
Short term deposit rate	…	…	…	3.2
Long-term bond yield	…	…	…	3.9

General government finances (% GDP)
Net lending/borrowing	-3.5	-3.2	-2.6	-2.6
Structural balance (% potential GDP)	-3.6	-3.5	-2.8	-2.7
Structural primary balance (% potential GDP)	-2.5	-2.3	-1.6	-1.5
Consolidated debt (gross)	46.2	46.9	47.1	47.1

External accounts (% GDP)

Current account	7.1	6.3	5.2	5.2
International investment position, net	80	83	85	86
Gross debt 1/	301	303	302	302
Net debt 1/	-169	-178	-185	-191

MEMORANDUM ITEMS

Nominal GDP (bn €)	23.1	24.6	26.1	27.7
Population (1,000)	553	563	573	584
GDP per capita ($)	45,167	49,277	53,082	55,176
Real effective exchange rate	…	…	…	…

Sources: Authorities’ data, Eurostat, and IMF staff estimates and projections.

1/ Excludes direct investment intercompany lending. Historical data are staff estimates.

[1] Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country’s economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.

[2] At the conclusion of the discussion, the Managing Director, as Chair of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country’s authorities. An explanation of any qualifiers used in summings up can be found here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm.

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