Malta has successfully lobbied with Brussels to keep the controversial fuel and energy subsidies in place as long as it keeps public finances within EU parameters.

Finance Minister Clyde Caruana made this announcement when addressing social partners during the launch of the 2025 Pre-Budget document.

“We have been allowed to keep the energy and fuel subsidy as we are playing by the rules of the game,” he said.

The finance minister touched on the issue when dealing with public finances, particularly the new EU rules regulating the deficit and debt levels. Caruana noted that Malta had opted to take the option of cutting the deficit to 3% or lower within the four-year period allowed by the EU rules. Moreover, Malta will be reaching this target in just two years by the end of 2026, he added. Consequently, Malta made the case that the fuel and energy subsidies would not be a burden on public finances after all. Hence, “it was allowed to keep these subsidies in place, even though the Commission wished otherwise,” the finance minister told social partners.

As for Malta’s debt, Caruana said this was under control and would remain around 10% below the EU’s threshold of 60% of GDP.

In his address he reiterated the Prime Minister’s pledge that the forthcoming budget would contain significant income tax cuts for the middle class.  Though he did not elaborate further, he quelled concerns that such decision at this point in time would jeopardise public finances. Caruana insisted that if there would be such risk he would have no qualms to object to such popular measure.

Government’s confidence on this matter stems from the fact that according to the finance minister in the last year tax collection had improved to the tune of €500 million better off than the previous year. This figure excludes the additional revenue generated through economic growth, he said.

Click here for the 2025 Pre-Budget document.