IMF Executive Board Concludes 2025 Article IV Consultation with Malta
IMF News, February 6, 2026
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- Published: February 6, 2026
Overview
- Malta’s economy maintained robust momentum despite global uncertainties, with 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.
Economic performance and projections
- Annual growth averaged 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 at 3.9 percent in 2025.
- Inflation declined to slightly above 2 percent.
- The labor-driven growth model has strained infrastructure and public services; labor-led expansion is expected to continue in the medium term but slow in the longer term since Malta cannot sustain a continued population increase.
- The financial sector remains sound and well-capitalized.
Executive Board assessment — macroeconomic and fiscal stance
- Directors commended sound macroeconomic management and public debt on a sustainable trajectory.
- Risks are tilted to the downside; emphasis on transitioning toward a productivity-driven growth path while preserving macroeconomic stability.
- Directors welcomed the narrowing fiscal deficit and authorities’ commitment to the EU fiscal framework.
- Fiscal consolidation should be sustained to maintain public debt at current levels and create fiscal space for investments in human capital, infrastructure, and innovation.
- Scope identified to enhance revenue mobilization, including:
- continued digitalization of tax systems,
- improvements in VAT administration,
- improvements in corporate taxation.
- Importance of strengthening public financial and investment management.
- Recommendation to gradually phase out untargeted electricity and fuel subsidies while protecting vulnerable groups.
Financial sector and macroprudential recommendations
- Directors noted high capital and liquidity buffers and low non‑performing loans in the banking sector.
- 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.
- Welcomed planned expansion of macroprudential measures and encouraged:
- continued strengthening of financial sector supervision,
- improved data availability,
- enhanced stress‑testing.
- Encouraged sustained progress in strengthening the AML/CFT framework.
Structural reforms and long-term growth policy recommendations
- Advancing structural reforms is essential to sustain high growth.
- Emphasized addressing labor shortages and persistent skills mismatches.
- Recommended stepped‑up investment in infrastructure and technology to support higher value‑added activities.
- Welcomed authorities’ new migration and education strategies.
- Emphasized improving judicial efficiency and sustaining progress in digitalization and innovation.
- Welcomed efforts in strengthening energy security and climate resilience and encouraged continued progress toward the green transition.
Key statistics and projections (selected)
- Real GDP (expenditure): 2024 est. 6.8; 2025 proj. 3.9; 2026 proj. 4.0.
- Domestic demand: 2024 est. 5.9; 2025 proj. 4.7; 2026 proj. 4.3.
- Output gap (% potential output): 2024 est. 1.2; 2025 proj. 0.8; 2026 proj. 0.5; 2027 proj. 0.4.
- Gross national savings (% GDP): 2024 est. 26.1; 2025 proj. 25.5; 2026 proj. 24.2.
- Investment (% GDP): 2024 est. 19.0; 2025 proj. 19.1.
- Consumer prices (HICP, avg): 2024 est. 2.4; 2025 proj. 2.0.
- Consumer prices (HICP, eop): 2024 est. 1.8; 2025 proj. 2.2; 2026 proj. 2.1.
- Employment (labor % change): 2024 est. 5.6.
- Wages (labor % change): 2024 est. 4.5; 2025 proj. 3.8.
- Unemployment rate (%): 2024 est. 3.2; 2025 proj. 2.5.
- Net migration (% population): 2024 est. 1.7.
- Unit labor costs: 2024 est. -0.3; 2025 proj. -0.2.
- Credit to the private sector (% change): 2024 est. 6.9; 2025 proj. 5.4; 2026 proj. 5.8.
- Credit to the private sector (% GDP): 2024 est. 66.5; 2025 proj. 66.2; 2026 proj. 65.5; 2027 proj. 65.2.
- General government net lending/borrowing (% GDP): 2024 est. -3.5; 2025 proj. -3.2; 2026 proj. -2.6.
- Structural balance (% potential GDP): 2024 est. -3.6; 2025 proj. -2.8; 2026 proj. -2.7.
- Structural primary balance (% potential GDP): 2024 est. -2.5; 2025 proj. -2.3; 2026 proj. -1.6; 2027 proj. -1.5.
- Consolidated debt (gross % GDP): 2024 est. 46.2; 2025 proj. 46.9; 2026 proj. 47.1.
- Current account (% GDP): 2024 est. 7.1; 2025 proj. 6.3; 2026 proj. 5.2.
- International investment position, net: 2024 est. 80; 2025 proj. 83; 2026 proj. 85; 2027 proj. 86.
- Gross debt 1/: 2024 est. 301; 2025 proj. 303; 2026 proj. 302.
- Net debt 1/: 2024 est. -169; 2025 proj. -178; 2026 proj. -185; 2027 proj. -191.
- Nominal GDP (bn €) (MEMORANDUM): 2024 est. 23.1; 2025 proj. 24.6; 2026 proj. 27.7.
- Population (1,000) (MEMORANDUM): 2024 est. 553; 2025 proj. 563; 2026 proj. 573; 2027 proj. 584.
- GDP per capita ($) (MEMORANDUM): 2024 est. 45,167; 2025 proj. 49,277; 2026 proj. 53,082; 2027 proj. 55,176.
Source: IMF Executive Board Concludes 2025 Article IV Consultation with Malta, February 6, 2026.