IMF Staff Country Reports

This Selected Issues paper compares Malta’s response to that of other European countries and discusses the pros and cons of different policies, in light of the desirable policy priorities in the current context. This chapter also analyses the fiscal and distribution implications of alternative energy pricing policies in Malta, focusing mainly on electricity prices for households. The authorities are stepping up their efforts to increase renewable energy production, but in the near term, Malta will continue to remain vulnerable to energy price shocks. Malta has opted for freezing electricity and fuel prices. In considering options for an exit strategy, distributional impacts for households and fiscal implications are key. Allowing a full pass-through would have a significant impact on households’ consumption in Malta but comparable with other European peers. The simulation suggests that household burden as a share of consumption is higher for low-income households, mostly due to higher electricity prices.