Issue link: https://maltatoday.uberflip.com/i/1528615
3 maltatoday | TUESDAY • 29 OCTOBER 2024 BUDGET2025 GDP will grow and inflation will moderate over the years, according to the Budget 2025 estimates, despite a drop in the government's recurrent expenditure as a percentage of GDP. Real GDP growth is expected to hover be- tween 4.3% and 4.5% over the next three years, which is well above the real GDP growth aver- ages at EU level. The inflation rate will also moderate between 2.1% and 2.3% over the same time period. Meanwhile, the gap between recurrent rev- enue and recurrent expenditure is expected to widen significantly over the next years. In 2025, recurrent expenditure will sit at 29.3% of GDP while revenue will stand at 31.5%. By 2027, these will be 27.5% and 31.5% respective- ly. This growing gap between government reve- nue and expenditure comes down to increased efforts in tax collection, as well as decreased spending on energy subsidies as a percentage of total government expenditure. As far as energy subsidies are concerned, the share of government spending on this meas- ure should drop to 2.4% in 2025. In 2023, the spending share was 4.8% of recurrent expend- iture. Between changes in tax bands, spending on subsidies, and other budgetary measures, the government should be putting around €550 million in people's pockets. Meanwhile, capital expenditure is set to grow over the years. It is set to dip slightly in 2025 to 4.4% of GDP, but by 2027, the govern- ment will be spending 5% of GDP on capital projects. The deficit should decrease over the years and reach the 3% of GDP target in 2026. In 2025, the deficit should drop to 3.5% of GDP. Public debt will increase slightly as a percent- age of GDP but will only reach 50.1% in 2025 before dropping to 50% in 2026 and 49.2% in 2027. Fiscal paradox: Decreasing spending while putting more money in people's pockets Malta's GDP is expected to continue growing in real terms, despite the government committing itself to a more contractionary approach to its fiscal spending WEDDING GRANT The existing wedding grant is increased by €170 to €1,000 per couple. PENSION SCHEMES Government will launch a drive to introduce occupational pension schemes. This will not be mandatory for employers. For public servants, the government will match what the employer contributes to such a scheme, up to a maximum of €100 per month. PROPERTY GRANTS • Extension of €10,000 grant • Extension of first- and second-time buyers schemes • Extension of fiscal initiatives on UCA or vacant properties • Extension of capital gains tax exemption on first €750,000 • Grant of €15,000 in Malta and €40,000 in Gozo for first-time buyers • VAT savings of up to €54,000 on the first €300,000 in restoration expenses EDUCATION • Investment in educators through renewal of sectoral agreement • Extension of €150 grant for people working atypical hours • Extension of grant between €60 and €140 to workers who don't earn more than €60,000 a year. HEALTH • Increased capital and recurrent investment in health sector • Allocation of €14 million to shrink the waiting list • New mental health initiatives - €4.5 million Finance Minister Clyde Caruana delivering his Budget speech (Photo: James Bianchi/MaltaToday) NICOLE MEILAK nmeilak@mediatoday.com.mt