Issue link: https://maltatoday.uberflip.com/i/1482987
maltatoday | SUNDAY • 30 OCTOBER 2022 10 BUDGET2023 PKF Malta has issued a re- port which analyses the 2023 Budget speech by the Minister for Finance and Employment Clyde Caruana. PKF Malta stated that the budget focused on conveying a message of stability during a highly tur- bulent economic period. The Maltese economy has per- formed relatively well when compared to the rest of Eu- rope amidst the geo-political turmoil associated with the Russian invasion of Ukraine. The country also recorded an annual real GDP growth of 8.5% for the first half of 2022, as employee compen- sation grew 8% from the pre- vious year. However, rising inf lation has still affected the Maltese islands due to high energy prices, supply chain disruptions, and a persistent increase in aggregate demand. PKF Malta added that the government is committed to shield businesses and the pri- vate sector from experienc- ing major rises in their ener- gy bills, in order to maintain their external competitive- ness, was a key theme in the budget speech. The government wants to maintain current water and electricity rates while offset- ting the rise in energy costs from public funds. In turn, as expected, due to rising in- flation, the announced €9.90 weekly cost of living adjust- ment (COLA) was more than three times of the 2000-2021 average (€3.10). To minimise the influence of global volatility on domestic prices, the 2023 Budget also includes a number of incen- tives to diversify the overall business portfolio of Maltese firms. More specifically, a platform called "Start in Malta" will be set up to act as a one-stop shop for start-ups, and an innova- tive start-up incubator centre will be developed through EU funds. The Micro Invest scheme will also be expanded such that social enterprises will be qualified for a maximum tax refund of €70,000 over a three-year period. The gov- ernment has also extended the grant scheme for purchasing various electric vehicles, rang- ing from motorcycles and mo- peds to pedal electric cycles and motorised bicycles. Looking ahead, the Finance Minister claimed that in 2023, the Maltese economy is ex- pected to maintain the posi- tive momentum observed in the second half of 2022. Em- ployment growth is forecasted to stand at 3.4% in the upcom- ing year, with the unemploy- ment rate hovering around 3.1%. Real economic growth is expected to slow down from 6% to 3.5% in 2023. Inflation is also expected to fall from 5.7% in 2022 to 3.7% in 2023. When addressing the sustain- ability of public finances, the Finance Minister claimed that the fiscal deficit as a percent- age of the GDP is expected to decline from 5.8% in 2022 to 5.5% in 2023. PKF Malta Senior Partner George Mangion said: "Our team of economists has pro- vided a summarised version of the salient points from this year's budget. We believe this report will be useful for busi- nesses and individuals want- ing to understand the impli- cations of the Budget speech." PKF Malta publishes report on 2023 Budget highlights