Issue link: https://maltatoday.uberflip.com/i/1510683
MOBILITY Financial incentives aimed at facilitating mobility will be available. SUPPLY CHAIN Government will be making a multi-million euro investment in ST Microelectronics to raise Malta's standing in the supply chain. DIRECT ASSISTANCE Between social measures and subsidies, government will be giving people €500 million. This is the highest amount ever given out in direct assistance. 3 maltatoday | TUESDAY • 31 OCTOBER 2023 BUDGET2024 NICOLE MEILAK MALTA'S deficit will remain above 3% of its GDP, forcing the country to enter the EU's excessive deficit procedure once the rule change comes into force. According to the Budget 2024, Malta's defi- cit-to-GDP ratio will stand at 4.5% next year, a 0.5-point decrease from the year prior. The deficit ratio will shrink by 0.5 percent- age points every year until at least 2026, by which point it will reach 3.5%. According to the EU's stability and growth pact, member states have to maintain a 3% deficit-to-GDP ratio and a 60% debt-to-GDP ratio. If member states exceed these thresh- olds, they must undergo corrective measures to bring excessive deficits down. However, these rules are expected to change. Earlier this year, the European Commission proposed amendments to the pact and its corrective arm dubbed the excessive deficit procedure. With a deficit ratio exceeding 3%, Malta will be subject to a medium-term fiscal-structural plan of four years to bring the ratio down. Nonetheless, Malta's deficit ratio is expect- ed to reach this threshold within four years. Meanwhile, Malta's debt levels will remain below the 60% EU threshold between 2024 and 2026. However, the debt will continue to increase considerably as a percentage of GDP. The government's recurrent expenditure will decline over the coming years and will reach 32.4% of GDP next year. By 2026, re- current expenditure will be 30.1% of GDP. Meanwhile, the government's recurrent rev- enue will also decrease, but at a slower rate compared to recurrent expenditure. In 2024, recurrent revenue will sit at 33.3% of GDP, and go on to reach 32.7% of GDP in 2026. The government will register €904,500,000 in capital expenditure next year. But spend- ing in will increase every year after that and reach €1.1 billion in 2026. Interest expenditure will stand at €271,700,000 in 2024, increasing every year and reaching €348,700,000 in 2026. In terms of macroeconomy, real GDP growth will hover around 4.2% for the next three years, which is considerably higher than the EU average of 1.4%. Inflation will fall to 3.7% in 2024 and fall further to 2% in 2025. Deficit will continue to shrink, but remain above 3% The deficit will shrink by 0.5 percentage points every year until 2026, and would put Malta into the excessive deficit procedure INCENTIVES FOR INDUSTRIES New initiatives will be offered in the following industries: manufacturing, financial services, green bonds, family businesses and offices, and aircraft leasing. CAPITAL PROJECTS Government will be looking at how to make the best use of the area available on the St Luke's Hospital site. ENERGY Government will be spending €320 million on energy subsidies in 2024. A further €30 million will be spent on wheat subsidies. Effectively, €5 out of every €100 spent by the government in 2024 will go towards energy subsidies. A middle-income family with two cars and no major expenses are saving €1,300 a year on fuel and €700 a year on electricity bills. Government does not offer tax cuts on energy but families still save money on fuel and electricity. Finance Minister Clyde Caruana delivering his Budget speech as Prime Minister Robert Abela looks on