Malta’s government debt increased by €789 million in 2025, reaching €11.41 billion, even as the country’s annual deficit narrowed considerably compared to the previous year.According to figures published by the National Statistics Office (NSO), government debt rose from €10.62 billion in 2024 to €11.41 billion in 2025, representing 46.3% of the country’s Gross Domestic Product (GDP).This marks a slight increase in the debt-to-GDP ratio, which stood at 46% in 2024.Meanwhile, Malta’s government deficit fell to €505.7 million in 2025, an improvement of €309.2 million compared to the €814.9 million deficit recorded in 2024.As a percentage of GDP, the deficit declined from 3.5% in 2024 to 2.1% in 2025.The figures show that while the government continued to spend more than it collected, the gap between revenue and expenditure narrowed significantly.Government revenue reached €8.65 billion during 2025, an increase of €831 million compared to the previous year.However, expenditure also continued to rise, reaching €9.15 billion, up by €521.8 million from 2024.This means that although government spending increased, revenue grew at a faster pace, contributing to the reduction in the annual deficit.The latest figures also highlight the continued growth of Malta’s national debt over recent years.In 2022, government debt stood at €9.04 billion before increasing to €9.82 billion in 2023 and €10.62 billion in 2024.By the end of 2025, the figure had reached €11.41 billion, representing an increase of approximately €2.37 billion over three years.Despite this increase in absolute terms, Malta’s debt-to-GDP ratio remained below its 2022 level of 50.1%, reflecting changes in the size of the country’s economy.The NSO also explained that adjustments were made to the government’s financial accounts to align them with European accounting standards.While the Government’s Consolidated Fund recorded a deficit of €823.9 million in 2025, the figure was adjusted to €505.7 million under the accrual-based methodology used for European reporting.Among the largest positive adjustments were €391.6 million related to the timing of cash transactions and a €176.5 million surplus recorded by extra-budgetary units.On the other hand, negative adjustments included €164 million in other accounts receivable and payable, as well as €71.8 million in government compensation to former National Bank of Malta shareholders.The NSO also highlighted that the increase in government debt was greater than the annual deficit.This difference was partly explained by financial transactions and other adjustments that affect debt levels without being reflected directly in the government’s fiscal balance.In 2025, these adjustments amounted to 1.1% of GDP, with increases in currency and deposits and holdings of equity and investment fund shares among the main contributing factors.The figures form part of Malta’s latest reporting obligations under the Maastricht Treaty, with the government submitting updated deficit and debt statistics to the European Commission on 30th September.The NSO also revised some previously reported figures following the availability of audited financial statements from extra-budgetary units and local councils.The latest statistics show that while Malta made progress in reducing its annual deficit during 2025, government debt continued to rise, reaching its highest level in absolute terms within the four-year period covered by the report.What do you make of this?•