Arrival of Covid-19 leads Malta to register one of highest deficits in EU

In a period marked by the arrival of the Covid-19 pandemic, Malta’s government deficit was among the highest in the EU during the first quarter of 2020, Eurostat figures show.

Malta’s deficit amounted to 10.5% of the GDP in the first three months of the year, a ratio only surpassed in Belgium (11.5%) and Italy (10.8%). Among the EU’s 27 members, only Cyprus registered a surplus during the same period, which represented 1.8% of its GDP.

The entire EU registered an overall deficit amounting to 2% of the GDP, while the euro area’s deficit stood at 1.7%.

When seasonally-adjusted figures are taken into account, Malta’s deficit appears to be the highest in the block, at 8.5% of the GDP. However, Eurostat did not provide seasonally-adjusted figures for six countries, including Italy.

The EU’s seasonally-adjusted deficit amounted to 2.3% of the GDP in the first quarter of the year, while that of the euro area amounted to 2.2%.

Across the bloc, the total government revenue amounted to 46.3% of the GDP in the first quarter of 2020, up from 46% in the previous quarter. But total government expenditure rose sharply during the same period, from 46.7% to 48.6% of the GDP.

Maltese debt remains far lower than EU average

As one might expect, higher deficits led to a general increase in government debt. Malta was no exception to the rule, though its own government debt – which reached 44.4% of the GDP at the end of March – remained significantly lower than the EU average.

The EU’s total government debt amounted to 79.5% of the GDP at the end of March, up from 77.7% at the end of 2019. At the same time, the euro area’s debt ratio increased from 84.1% to 86.3% of its GDP.

Government debt exceeds 100% of the GDP in five EU member states, namely Greece (176.7%), Italy (137.6%), Portugal (120%), Belgium (104.4%) and France (101.2%).

At the other end of the scale, the lowest debt levels may be found in Estonia (8.9%), Bulgaria (20.3%), Luxembourg (22.3%), Czechia (32.8%), Denmark and Lithuania (both 33.2%). Malta’s own debt ratio is the tenth lowest among the 27 member states.

During the first 3 months of the year, the debt ratio increased in 24 member states. The only three exceptions are Lithuania, where the debt ratio fell by 3%, and Bulgaria and Denmark, which both registered a modest 0.1% decrease.