Budget 2025: As it happened

We're closing the live blog

It's been an eventful day, but it is now coming to a close. We're ending our live blog here, but our homepage is full of the latest measures announced in the Budget 2025. To read more on what's in store next year, click the links below. Thanks for following the Budget 2025 with us.

• MaltaToday salary calculator: How will government’s tax cuts affect you?
• Explained: How your income tax brackets will change in 2025
• Energy subsidies to stay, especially in the case of wider conflict in the Middle East
• Bernard Grech: Budget was drawn up to save Robert Abela’s political career
• Graffitti stage protest in Strangers' Gallery as Budget is interrupted
• Budget 2025: Pensioners get further increase of €416 per year
• Budget 2025: PN misreads debt figures, minister says as burden drops to 49%
• Budget 2025: Decreasing spending while putting more money in people’s pockets
• Budget 2025: €250 increase in children’s allowance
• Budget 2025: Up to €100 monthly for public sector workers’ occupational pensions
• Budget 2025: €250 increase for parents whose children attend specialised therapy
• Budget 2025: Social partners react to Caruana’s Budget speech

Press conferences overview

During the post-Budget press conference, Prime Minister Robert Abela was asked to comment on the fact that next year’s budget offers short-term proposals to address the country’s traffic crisis. Abela said Transport Minister Chris Bonett will be unveiling a number of short-term measures, noting that the country “never explored any short-term or medium-term measures”. Meanwhile, Caruana said that energy subsidies are set to remain in place even if a wider conflict erupts in the Middle East and energy prices skyrocket again.

Separately, Opposition leader Bernard Grech said the Budget was an attempt by Robert Abela to save his political career in the shadow of Labour's poor electoral result in last June's European Parliament election. “The government knows what the people’s problems are – the quality of life, infrastructure, over population, services, power cuts, drainage problems – the Budget fails to address these problems,” he said.

Prime Minister's press conference

Now it's the Prime Minister's turn to deliver his press conference.

Opposition reacts

Opposition leader Bernard Grech is giving a brief press conference on the Budget 2025. Watch it below.

GWU reacts

The General Workers’ Union said this budget is “a sustainable plan that rewards work and promotes social solidarity”.

Josef Bugeja, Secretary General of the GWU, said: “The GWU is satisfied that, thanks to the workers’ contributions and the government’s leadership, the current economic situation is fostering growth. This growth leads to increased benefits for workers and all members of Maltese society, helping everyone to move forward.”

“Despite the challenges we face, the Government will inject approximately €550 million into the community, while the country’s deficit continues to decline sustainably. This effort is achieved without raising taxes and by reducing tax rates. This demonstrates good governance by collecting necessary revenues while controlling Government expenditures, thereby supporting both the people and the country,” Bugeja said.

Malta Chamber reacts

The Malta Chamber of Commerce, Enterprise and Industry said that while the Government has recognised the importance of quality over quantity, the Budget 2025 still lacks the necessary measures and economic vision to drive a major quality leap and a tangible improvement in the well-being of society.

“This is a budget that incentivises consumption but does not address productivity, competitiveness and attractiveness for investors. The focus is on distributing wealth rather than generating it in a sustainable way.”

On occupational pensions, while the government will be matching contributions for public sector employees, the Malta Chamber pointed out that employer incentives to do the same have not been improved, putting private employers at a disadvantage on the labour market.

Moreover, it said the 2025 budget did not allocate funds for long-overdue reforms such as that needed in public procurement.

“This budget represents another missed opportunity to address significant challenges impacting overall well-being and the country's competitiveness and attractiveness.”

What's next?

The Budget 2025 speech has concluded, but the night's not over yet. Prime Minister Robert Abela and Opposition leader Bernard Grech will each give a press conference reacting to the Budget measures. MaltaToday will be in Valletta to cover both conferences.

Cassola reacts

Independent politician Arnold Cassola expressed mixed feelings on the Budget 2025. He welcomed the extension of tax bands, which would leave an average of €450 per year for working individuals and families, as well as a €250 increase in children's allowances. However, he questioned whether these benefits would be sufficient to offset the rising costs of essential goods and housing. Cassola criticised the minimal increase in pensions, particularly for pre-1962 born pensioners, who will receive significantly less compared to their post-1962 counterparts. 

Cassola acknowledged some improvements, such as increases in disability benefits and support for caregivers but deemed the €2 million allocation for local film production as insufficient. He also criticised the government for frequently announcing projects that do not materialise, particularly in health care and infrastructure. Overall, he expressed skepticism about the budget's effectiveness in addressing the escalating cost of living and improving the quality of life, fearing that promised improvements may not be realised.

UĦM reacts

Watch UĦM chief Josef Vella give his first reactions to the Budget 2025

Caruana concludes

The Finance Minister is giving his concluding remarks now, and is repeating the "quality over quantity" mantra from earlier.

"Now is the time to start the next journey and take the next step for better economic development. We need to build the country of tomorrow. The future starts here."

Creative Malta gets €2 million

Creative Malta will get an increase in funding to €2 million, aimed at supporting local film producers and promoting the Maltese film industry. This investment is part of a broader strategy that includes participation in international art events, the establishment of the Culture Hub in Marsa with a €15 million allocation from European funds, and various restoration projects across the country. Additionally, the government is focusing on the conservation of heritage sites and enhancing cultural activities, such as supporting Carnival in Gozo, further underscoring the importance of cultural investment in fostering community engagement and economic growth.

0% VAT on sanitary products

The VAT rate on essential sanitary products will be reduced to 0%. This tax reducation will also apply to medical accessories for women related to cancer treatment. 

Meanwhile, an agency for public consultation and research will be set up to help engage with social partners. This agency will be responsible for coordinating, managing, and facilitating research, particularly on themes being discussed at the European level. 

The MCESD will also get a chief executive officer.

JP Fabri on the green transition

JP Fabri: "The transition to a green economy is a significant challenge. Although there are several plans and initiatives, one would have hoped to see more incentives based on conditionality. Grants and subsidies on moving towards renewable energy are important nudges as well as the use of taxation as a deterrent and incentive to switch. Unfortunately, the grants mentioned were related to EVs however one would have liked new and better schemes to support the transition to PVs and battery storage."

The construction and property sector

The BCA plans to expand its services, including free legal and expert assistance for affected parties, and initiatives like the Irrinova Darek scheme to help low- to middle-income families improve energy efficiency in their homes.

The OHSA will establish a center in Gozo for immediate service and create an official register of health and safety experts based on qualifications and experience. 

Additionally, tax incentives for property improvements will be extended for those buying or selling properties older than 20 years and vacant for over seven years, as well as properties in urban conservation areas (UCA). These incentives include exemptions from Capital Gains Tax and stamp duty, VAT savings on restoration expenses, and grants for first-time buyers.

Safety and security

Budget 2025 plans include expanding the Community Police initiative and establishing a second domestic violence victims' hub in Imtarfa, along with panic alarm facilities. A new service will provide childcare for victims appearing in court and support for those caring for elderly or disabled individuals. The introduction of electronic monitoring is also planned.

Next year, the government will also negotiate new sector agreements for members of the Armed Forces and the Civil Protection Department, building on previous agreements.

For disaster preparedness, a committee will evaluate scenarios under the National Emergency Response Framework Programme (NERFP), identifying deficiencies. Initial projects will include a Media Policy and a strategy for major incidents, as well as improvements to Boiler Wharf for maritime crisis response.

MHRA Budget reaction

The Malta Hotels and Restaurants Association (MHRA) welcomed the budget, saying it lays a strong foundation for a resilient economy designed to adapt and thrive amid global changes. 

“This budget places significant emphasis on social measures while also addressing sustainability, innovation, and infrastructure, which serve as the backbone for strengthening key sectors, particularly tourism,” the MHRA said. 

It welcomed revisions in the wage regulation orders, emphasising the need for these changes to accurately reflect the realities of the hotel and restaurant business. “It is crucial that wage regulations do not create shocks in the restaurant sector; they should be evaluated to consider the unique nature of the industry, which often experiences concentrated activity on weekends. Additionally, the principle of equal pay for work of equal value must account for the nature of temporary workers in this sector.”

Public and private transport

The electric vehicle purchase scheme will be extended but at a lower amount, providing grants of up to €8,000 for new electric cars and up to €2,000 for electric motorcycles. The grant on electric cars used to be €11,000. An additional grant of €1,000 for scrapping old vehicles will also be offered, with extra support for vehicles registered in Gozo. This initiative will be funded by the European Recovery and Resilience Fund.

Furthermore, customers ordering electric vehicles by October 28, 2024, but not registered until 2025, will still qualify for a current €11,000 grant. Incentives for purchasing pedelecs and e-kickscooters will also be extended.

Electric vehicles and plug-in hybrids with at least 50 km electric range will remain exempt from registration tax and annual road license fees for five years from the first registration date. Grants for full VAT refunds on electric bikes and incentives for assisted bicycles will continue, along with support for converting petrol or diesel vehicles to electric.

A national strategy promoting cycling as an alternative travel method will be published, alongside the first phase of the CSAM (Connections for Safer Active Mobility) project, which includes creating bike paths and pedestrian zones in urban areas. The government will invest in an Intelligent Traffic Management System for better traffic flow optimisation.

JP Fabri: Budget weak on productivity

JP Fabri: "Government has made a conscious decision to support disposable income and consumption. On the other hand, the Budget is not strong on enhancing the productive base of the economy. Would have liked to see initiatives to support industry in enhancing investments through conditional support to truly increase productivity, digitalisation and the green transition. Although there are a number of initiatives and strategies, one hopes that these will be implemented."

Carbon-free economy by 2050

Support will continue for residences investing in renewable energy systems and efficiency improvements. Incentives will be provided for the installation of photovoltaic panels, energy storage batteries, heat pump water heaters, and the restoration of traditional wells. The private sector will also be encouraged to develop large-scale renewable energy installations.

Opportunities for investment in green and blue economies and renewable energy generation are being explored, including wind energy in Malta's exclusive economic zone and solar projects in territorial waters.

The strategy involves several steps: implementing a second interconnector to enhance network stability; investing in mass energy storage using land-based batteries; launching a national policy to promote renewable energy projects; and conducting market consultations to gauge interest. 

This year, six potential renewable energy zones were identified, with a Strategic Environmental Assessment pinpointing two areas with minimal environmental impact for development. Although the seabed's characteristics limit suitable areas for fixed wind turbines, offshore floating wind technology presents an alternative to harness wind energy. Nearshore solar projects are also under consideration.

Agriculture and food security

Next year, a Food Security Authority will be created to ensure food safety during crises. To reduce food waste, tax incentives will encourage producers and sellers to donate near-expiry products for social needs or sell them at discounted prices. 

Support will also be provided to fishermen adopting environmentally friendly practices, with additional infrastructure investments in fishing ports. A €4 million EU-funded project will boost digitisation in the fishing and aquaculture sectors, along with the establishment of a research agency for fishing and aquaculture.

Efforts will continue to assist those in animal protection through financial schemes. To create equitable market conditions, excise duty on low-alcohol beer produced by small, independent breweries will be reduced, with a change in calculation from Degrees Plato to ABV%. Excise duty for small wine producers will also be significantly decreased, benefiting local farmers.

JP Fabri on Vision Malta 2050

JP Fabri: "There is a broad consensus on the need for a renewed and long-term national strategy for Malta. One hopes that Vision2050 will be a holistic exercise that will look into what Malta aspires to be in 2050 and will tackle the full spectrum of quality of life and not just the economic pillar. We need to look at education, healthcare, the environment and much more. Other policies will then be anchored around this so that we can achieve the targets and aspirations."

Financial services and gaming

Legislation is being planned to enhance Malta’s attractiveness in financial services, focusing on family offices, aircraft leasing, fintech, and AI. By 2025, legislation concerning Limited Partnerships will be introduced to promote these new areas in the country.

In early 2025, a visa for esports athletes will be introduced to facilitate talent mobility in the country. International teams like Furia and Talon esports have already chosen Malta as their European base.

Efforts are being made to encourage the establishment of back-office activities in Malta, such as administrative and support services, both for licensed activities and those that do not require licenses. In addition to the existing facilities in this sector, the Highly Qualified Persons measure will be extended.

Innovation, start-ups, and family businesses

The government is preparing for a Digital Identity Wallet, which will enable citizens and businesses to share their digital identity securely and efficiently via a smartphone app. The European Digital Innovation Hub (DiHubMT) is another ongoing project that is building a community of start-ups and SMEs, providing them with mentorship, pre-accelerator and incubator services, as well as access to High-Performance Computing. Previously, students and start-ups had to travel to Italy, incurring costs of around €25,000 to access similar services.

Additionally, the Seed Investment Scheme has been relaunched, offering incentives for investments in local start-ups. 

Once again, the concession on the reduced stamp duty will be extended from 5% to 1.5% when family businesses are transferred inter vivos to children and younger generations, continuing to support family businesses.

Global minimum tax rate

The realm of international taxation continues to be dominated by the Two Pillar Solution, focusing on Pillar 2, which introduces a global minimum tax rate of 15%. Work within the OECD and the European Union on the implementation of these rules is ongoing.

Malta has opted to defer the implementation of this Directive. Meanwhile, discussions with the European Commission regarding measures and incentives, such as grants and tax credits (QRTCs), are still in progress. The aim is to ensure that these measures comply with EU and OECD rules.

JP Fabri on health measures

JP Fabri: "Whereas there is an increased investment in acute care infrastructure, a sustained investment in prevention remains elusive. One must note the measure to support gym memberships for youths however there needs to be a holistic approach including nutrition especially given Malta’s high rates of diabetes, obesity and other metabolic illnesses. Here again, it would be good to see more outcome-based policy making."

Vision Malta 2050

Malta is launching a vision document for 2050, aiming to establish the country's strategic direction for the coming decades with the central goal of improving the quality of life for all citizens. This vision will set key milestones for 2035 to ensure continuous and significant progress.

Caruana said this Vision Malta 2050 will address emerging issues such as climate change, technological transformation, demographic shifts, and global market dynamics, positioning Malta as a resilient, competitive, and sustainable nation. The vision will serve as a roadmap for the country’s economic, social, and environmental development, focusing on digital innovation, infrastructure, education, healthcare, and sustainability to ensure a higher quality of life for current and future generations.

The definition phase of Vision Malta 2050 is expected to be completed by the end of the first quarter of next year, with work on the project already underway.

JP Fabri on the Economic Migration policy

JP Fabri: The Economic Migration Policy is welcome however I would have liked to see a bigger emphasis on the implementation of the National Employment Policy with a more focused approach towards skills development, retraining and upskilling. The future economy is with us and we need a throughput of skilled workers that are ready to meet the needs of industry. Would have liked to see more initiatives in this regard.

Free gym memberships

Next year, the government will cover the first six months of gym memberships for youths born in 2005, 2006, and 2007.

Additionally, work will continue on the National Motorsport Center project in coordination with the Malta Motorsport Federation, including transferring land titles for the track to the federation. This year will also see the start of structural work on the first phase of the National Motorsport Center project.

Health measures

In the coming months, a tender will be issued for the expansion of the Emergency Department, the enhancement of Intensive Care services, and the establishment of an Acute Psychiatric Center. Additionally, €14 million will be allocated to significantly reduce waiting lists for specific surgeries, with an estimated increase of over 5,000 operations next year through cooperation with the private sector.

Occupational Therapy services will be introduced in the community for individuals aged 16 and older, and will also be provided in schools to directly address the development needs of children with various requirements.

JP Fabri on education measures

JP Fabri: "The investment in education is very much based on the improved conditions for teachers as well as investments in school maintenance and upgrades. The book vouchers are good to enhance literacy in Malta however we need many more outcomes-based policies and initiatives. Malta faces significant challenges in education especially related to Early School Leavers and low educational attainment. It would be important to get periodic updates on the implementation of the National Education Policy and to start seeing much more outcomes-based policy-making including impact assessments of such investments."

The labour market

The government plans to publish an Economic Migration Policy consultation by year-end.

To support experienced workers, Jobsplus will strengthen mentoring programs and create a registry for retirees wishing to continue working, offering grants that won’t affect pensions. 

Next year, a €150 grant for individuals in atypical work hours will continue. New legislation will regulate digital platform workers, improve work-life balance, and establish equal pay for equal work starting January 1, 2025. 

Upcoming amendments to the Wage Regulation Orders (WRO) will ensure legal uniformity across sectors and address anomalies related to leave and overtime payments to promote fair working conditions.

Educational measures

In education, key investments include renewing a sectoral agreement for educators covering 2023-2027, affecting around 8,600 teachers, with salaries expected to be nearly 10% higher than in other countries by 2024 and reaching almost 15% by 2027.

To support families with children in private schools, the government will increase tax deductions for school fees, raising amounts to €3,500 for kindergarten, €4,600 for primary, and €6,500 for secondary education.

The government commits to modernising over 100 schools over the next 13 years, financing eight projects annually that prioritize sustainability. This includes new schools in Gozo and significant investments in recreational facilities.

Other initiatives focus on improving IT infrastructure and educational quality, such as the One Device Per Child project and the Endeavour II scholarship scheme. The government will also give €20 to primary, secondary, and intermediate students for book purchases at the National Book Fair to promote literacy and support local publishers.

Tax collection improvements

The Administration of Tax and Customs in Malta is seeing positive results in tax collection and enforcement, ensuring that taxes owed are collected fairly. In the first half of 2024, €300 million in tax arrears was collected, with over 1,200 payment agreements finalised with taxpayers. Additionally, the timely submission rate of tax forms increased from 73% in 2023 to 93% in 2024.

Fiscal leadership

The government forecasts a positive fiscal trend, expecting to reduce the budget deficit from 4.4% to 4.0% this year, with further reductions to 3.5% next year, 3.0% in 2026, and 2.6% in 2027. It aims to meet European regulations of lowering the deficit below 3% within two years, instead of the allowed four years, by implementing a 0.5% annual reduction.

In response to opposition claims about increasing national debt, the government noted that the economy has grown by 200% since 2013, leading to a decreasing debt burden. The debt-to-GDP ratio is projected to be 49.5% in 2024 and 50.1% in 2025, well below the European threshold of 60%. 

Teachers’ union reacts 

The Malta Union of Teachers said the Budget presented by the Government outlines the current work being carried out in the education sector. 

“The MUT welcomes the mention of the Sectoral Agreement signed between the MUT and the Government as one of the most important measures in the education sector,” it said. “The budget outlines also the work on the Education strategy 2024-2030 which is also being carried out in consultation with the Union whilst it announces the new Forum for Education which was one of the proposals of the MUT to the Education Ministry. 

The Union said it was expecting measures in the budget to address the growth in school populations through the present economic model. It expected measures to establish more work-life balance of employees through the right to disconnect. “These were amongst the pre-budget proposals presented by the MUT to the Government.”

Social and affordable accommodation

There is nothing particularly new when it comes to social accommodation. The “Rent to Assist” scheme is helping families live in privately rented social accommodation. The budget includes further investments in this sector, enhancing existing schemes like the Rent Benefit, which has an annual budget of €10 million. Additionally, the maximum annual income limit for beneficiaries will increase by €1,000, and €2 million will be allocated for the installation of new lifts.

When it comes to affordable housing, the government will extend the Deposit Guarantee, Equity Sharing, Social Loan, New Hope, and Sir Sid Darek schemes. Additionally, the government plans to strengthen the First Time Buyers scheme, which has already received 4,895 applications, with an expected 463 more soon. First-time buyers will continue to benefit from the Grant on First Residence (GFR) and the reduced Stamp Duty. The reduction in Stamp Duty for second-time buyers will also be extended.

Support for the voluntary sector

The government is allocating nearly €25 million next year to support over 50 Public Social Partnerships with voluntary organisations. This initiative includes establishing a one-stop-shop in Southern Malta for training and resources.

Additionally, a 'volunteer bank' will be created, allowing individuals and professionals to donate their time, which will assist organisations through a centralised database. Enterprises donating to social, environmental, and animal welfare initiatives will also receive a tax credit of up to €500.

Past injustices

Next year, the scheme for former members of the corps who found employment in the public sector will be closed, marking the seventh and final year of the program. However, the scheme for those who entered public service after January 15, 1979, will remain in place to provide payments for a small number of former apprentices and students who started their courses before that date. These individuals continue to work due to their age, and the scheme will remain open for them until they reach retirement age.

Additionally, after necessary consultations, payments will begin as compensation under three other schemes for:

• Former employees of Telemalta Corporation who were engaged between January 1978 and January 15, 1979, and due to changes in the corporation's policy, were unable to qualify for a pension scheme similar to that of public service employees in effect until early 1979.
• Former employees of Malta Drydocks and Malta Shipbuilding who were arbitrarily transferred in 2003 to Industrial Projects and Services Ltd, resulting in a loss of income.
• Former employees of the Gas Board who were assimilated into Enemalta Corporation.

Active ageing

In the coming years, investments in SVDP will include the establishment of a Renal Unit, a new MRI machine, and plans for a new intermediate care building along with two additional wards—one for psychogeriatric care and another for palliative care.

For next year, the grant for seniors aged 75 to 79 living at home or in residential facilities they pay for will increase by €50 to €350. The grant for individuals aged 80 and older will remain at €450. The Carer at Home scheme will also be increased by €500, raising the total to €8,500 per year.

Forum Unions Maltin reacts

Forum Unions Maltin, the confederation of trade unions, welcomed the increase in tax bands announced in the budget. 

“This together with the increase in children allowance are measures to support employees and families. For.U.M. notes also the government measure to sustain employees opting for a third pillar pension whilst it welcomes the introduction of incentives for retired employees to provide mentoring in their areas of expertise,” they said. 

The union forum also said it was expecting to see the “long-standing promised measure” for sick leave of employees to be utilised for sick dependants, saying it is disappointed with the measure to increase the years of contribution of employees born in 1976 and later.

Carers grant

Next year, the Carers Grant, which is equivalent to half the net National Minimum Wage, will be increased by €193, bringing the total annual amount to €5,190 due to an €8.24 rise in the National Minimum Wage.

Currently, the grant is available only to parents of children over 16 years old who receive the Severe Disability Supplement and who do not work because they must care for their child. Starting in 2025, the grant will also be extended to parents of children under 16 with severe disabilities that require continuous and constant care, ensuring more families receive support.

Allowance for families with children with disabilities

The allowance for families with children who have physical or mental disabilities will increase by €5 per week, bringing it to €35 per week, or €1,820 annually. This marks the fourth increase since 2014. Approximately 2,300 families with a total of 2,510 children are eligible for this allowance.

Disability and carers assistance

The Enhanced Severe Disability Supplement will increase by €7.42 per week to €199.61. The Severe Disability Assistance will go up by €3.49 per week to €128.15, while Disability Assistance will also rise by €3.49, reaching €102.62. Enhanced Carers Assistance will increase by €5.24 per week to €179.02, and Carers Assistance by the same amount, reaching €125.92.

Additionally, a new measure will benefit individuals caring for two family members with high or medium dependency. These carers, who previously received only a single rate of Carers Allowance or Enhanced Carers Allowance, will now receive 1.5 times the standard benefit rate they are entitled to.

Drug addiction support

Individuals overcoming drug addiction will receive additional support to reintegrate into the workforce. Those who successfully complete a rehabilitation program and secure stable employment will qualify for two years of accredited social security contributions, aiding their long-term financial and social reintegration.

Means testing

Starting next year, increases in contributory pensions will be excluded from means testing for Free Medical Assistance eligibility, allowing more people to access free medications without losing their eligibility due to pension increases. This aligns with the evaluation method already used for Medical Assistance benefits, helping more elderly individuals retain their Kartuna r-Roża card.

Additionally, from January 1, 2025, everyone aged 75 and over who receives the Supplementary Allowance will automatically qualify for free medications through the Kartuna r-Roża, without needing to pass a means test.

Sickness assistance

The income limits for Sickness Assistance, which supports individuals unable to work due to certified illnesses, will be expanded to help more low-income families qualify. The law will be amended to raise the income thresholds for both couples and individuals living alone. The limits will increase by €416 per year, in addition to the annual statutory increases provided through the budget. This measure is expected to benefit around 800 recipients.

Assistance programs

The capital asset limit for eligibility in non-contributory assistance programs, such as the Age Pension, Social Assistance (including Unemployment Assistance), Medical Assistance, and the "Karta r-Roża," will be increased to offer greater support. Starting next year, the asset limit for married couples or partners will rise from €23,300 to €26,000, and for single individuals, from €14,000 to €16,000.

Social Assistance reform is also planned. This reform will support family heads unable to work due to health issues or child care responsibilities, based on a means test, with additional amounts provided for each family member. A new benefit, "Medical Social Assistance," will specifically support individuals unable to work due to medical conditions, assessed similarly to the disability pension.

JP Fabri: A social budget at heart

JP Fabri: "It definitely looks like a social budget at its heart with measures being addressed at improving disposable income with consumption being the main economic pillar. I do hope to hear measures that are investments in improving the social fabric and which go beyond allowances and social welfare. We need to see sustained investments in the social sector to improve and increase the capacity to support vulnerable families, homeless and other specific cohorts. We need to see social infrastructure being improved to support the cause and ensure that people will stop falling behind."

Additional COLA

The additional mechanism to combat the rising cost of living will provide low- and middle-income families with annual payments between €100 and €1,500 to help manage inflation. Payments will be made in two installments—one in December and the second mid-next year—distributing around €48 million among 100,000 families, supporting approximately 200,000 dependents.

For the Supplementary Allowance, eligibility criteria are being updated to support more couples while raising the benefit amounts. Currently, the primary recipients are single individuals, particularly widows and divorced or separated individuals. The maximum allowance for couples will increase by €190 to €1,289 annually, and for singles by €69 to €667, with the income limit for couples raised to €18,000 per year. With these changes, an additional 1,500 families are expected to qualify, on top of the current 20,500 beneficiaries.

Extending paternity leave for self-employed

The right to paternity leave is being extended to self-employed fathers, allowing them, like employed fathers, to take 10 days (or 80 hours) of paid paternity leave upon the birth or adoption of a child. The payment rate will match the maternity leave rate for self-employed mothers, based on the National Minimum Wage.

Additionally, the government is increasing the allowance for fostering. Next year, it will increase by another €10 per week, reaching €120 per week or €6,240 annually per child in care.

IVF incentives

To support prospective parents undergoing IVF treatment who are self-employed, the government will introduce a new entitlement. These individuals, including their spouses if also self-employed, will receive 100 hours of paid leave for each treatment cycle. This mirrors the existing entitlement for employed individuals, where the prospective mother receives 60 hours and the spouse receives 40 hours. Payments will be calculated based on the average weekly earnings of the self-employed individual over the previous year.

Wedding grant, childbirth bonus

The bonus for newborn children and adoptions, introduced four years prior, will be increased to €1,500 for the third or subsequent child in a family. This increase builds on the existing bonus of €500 for the first child and €1,000 for the second. This measure is expected to benefit around 580 families.

The Marriage Grant, received by couples upon marriage or civil union, will be increased by almost €170 to €500 per person, resulting in a total of €1,000 per couple. This grant is given to an average of 3,000 people annually.

Increase in children's allowance

The government will increase the Children's Allowance for the second consecutive year. This follows previous increases initiated in 2019 after a prolonged period of stagnation. The allowance will increase by €250 for each child. 

Occupational pensions

Caruana said the government will aim to have every employee entering or changing jobs to have the option to join an occupational pension plan. While employers won’t be required to contribute, they must offer employees the opportunity to join. Employees may choose to decline if they wish. The government, as an employer, commits to matching individual contributions up to €100 per month for its own employees.

This plan will benefit from the same tax incentives currently available for both employers and employees. Those already in private plans can join an occupational plan and enjoy similar tax benefits. Next steps involve finalizing details through discussions with relevant sectors and social partners, aiming to implement these schemes nationwide by mid-next year.

JP Fabri on pensions

JP Fabri: "Pensioners remain a vulnerable group and the increases in pensions are welcome. The sustainability of our pension system is key. Affordability of pensions is central. Therefore the move and incentives to increase private pensions are instrumental and long-coming. It is true that the current composition of our workforce driven by large migratory flows have supported the pay as you go system however there is no room for complacency and it is critical for the country to move towards the three-pillar system."

Pension increase

There will be an €8 weekly increase, or €416 yearly increase, in pensions. This includes the COLA. Those born before 1962 whose salaries would have exceeded the maximum pensionable income of €23,500 will receive an additional adjustment to their pensions.

Widowed pensioners will receive an additional increase in their pensions, entering the fourth year of a process that will culminate in all widowed pensioners receiving the full pension their spouses would have received. This adjustment will benefit around 7,500 widows and widowers, with an average additional increase of around €3 per week on top of the general €8 per week increase.

Wider tax bands: What's in it for you?

If you're wondering how the new tax band adjustments will affect you, then MaltaToday has you covered. Use our salary calculator here to check how much you'll be saving.

In pictures: Moviment Graffiti's Budget protest

While Caruana explains the new tax bands, take a look at what the Moviment Graffitti protest looked like from inside the Chamber.

JP Fabri: The wider tax bands

JP Fabri: "A widening of tax bands is expected to retain €140 million in the hands of Maltese families. The widening of bands at the lower levels is expected to have a significant social impact on families. This is a measure that is expected further to stimulate disposable income and therefore spending. I do hope that this will be complemented by structural and productivity-enhancing investments."

Income tax cuts

The moment we've all been waiting for. Through an adjustment in the tax bands, the government will essentially put €140 million in people's pockets.

JP Fabri: Growth concerns

JP Fabri: "As an economist I am concerned with the growth composition for 2024 and 2025. Although exports are expected to increase by around 5% in both years, GDP growth primarily emanates from domestic demand increases, mainly from private consumption expenditure. As we need to build a sustainable economic I need to emphasise the importance of export-led growth and the need to improve competitiveness through labour productivity increases for sustainable medium-term economic growth. Although there is a reduction in the deficit-to-GDP ration, this is coming from an increase in GDP. It is there important that more measures are taken to restrain  public expenditure growth, particularly in the context of the new EU economic governance framework and since Malta is subject to an excessive deficit procedure."

COLA, minimum wage

The COLA will stand at €5.24 a week in 2025, and students will receive a pro-rata increase in their stipends in line with this. Caruana mentioned that next year the national minimum wage will increase by €8.24 a week. This was announced last year.

JP Fabri: Economic performance defies global context

JP Fabri: "The economic performance registered by the Maltese economy seems to defy the global economic environment. Indeed, compared to its European peers, Malta had the highest economic growth rate in 2023 (7.5%), significantly outpacing EU average growth (0.4%). The latest projections by the European Commission expect Malta to continue leading the EU in economic growth in 2024 and 2025. In fact, according to the latest forecasts of the European Commission, the EU economy is expected to expand by 1.0% and 1.6% in 2024 and 2025, respectively, in comparison to 4.6% and 4.3% for Malta. Growth in 2024 is expected to be primarily driven by the domestic side of the economy (4.3 pp.) and, to a lesser extent, by external demand (0.6 pp.)."

Subsidies to remain in place

The government will continue to subsidise energy prices, fuels, and cereals despite pressure from the European Commission to cut these subsidies.

"We're not doing this for the sake of going against the European Commission. It is through prudence and hard work that this government is able to reap what it sowed."

Malta's economic forecast

Despite global challenges and the difficulties associated with being an island nation, Malta recorded the highest economic growth in the EU in 2023 at 7.5%, significantly exceeding the EU average. Net exports were the main driver of this growth.

The first half of 2024 saw continued strong performance, with real GDP growth at 5.9% and nominal GDP growth at 9.6%, primarily driven by domestic demand.

Malta's labour market remains robust, with an employment rate of 81.3% in 2023, well above the EU average of 75.3%. Jobs grew by 6.1% in Malta, and the unemployment rate was 3.5% during the same period.

"It's time to look at quality, not quantity"

If one sentence were to sum up Caruana's Budget speech introduction, it would be this. He's insisting that it is time to look beyond quantity and focus on quality.

"The people's message is that progress is measured not only by money but also by quality of life. [...] This government has taken care of your finances during tough times. This Government has taken care of the vulnerable through social measures. It's time to turn the page so that this country now focuses on quality and not quantity."

Malta's future economy

Looking to the future, Caruana is saying the economy of tomorrow will depend on advanced technology and modern engineering.

"If our country wants to move towards quality, we need the best Maltese and Gozitan minds in these areas. There are already start-ups and Maltese people working on this and we want to encourage them to continue. We need to give them the tools to grow even beyond our country."

A policy on economic migration

Caruana said the government will work on a policy document concerning economic migration. "This policy must be based on respect for all workers but above all on the needs of our country and the people, and of no one else."

Quality and quantity

Clyde Caruana is making a brief comment on economic externalities that are impacting people's standard of living. He says private sector access to third-country nationals has created a dependency in the local economy. 

"This has led to quantity rather than quality - and today the challenges we talk about in traffic, infrastructure and health among others come from this mismatch where infrastructure is not keeping up with the country's demand and the growing economy."

Pension increase, energy bill protection

Caruana has said that pensions will increase again, and subsidies on energy prices will remain in place.

"The Budget is taking place in a context where pensions will rise again even this year. In a context where, for another year, we are protecting households and businesses from higher energy bills. In a context where we will continue to protect the country from higher fuel prices."

And we're back in session

The protestors seem to have been escorted outside of the Chamber, and Clyde Caruana has started his Budget speech again. 

Parliament briefly suspended

It looks like Moviment Graffitti have staged a protest in Strangers' Gallery, interrupting the Budget speech. This is the first time a stunt of this sort has taken place during the Budget.

Protestors in the House

The broadcasting sound has been muted as protestors in the Strangers Gallery are shouting "Tiżfnu għad-daqqa tal-iżviluppaturi". 

A tax-cut budget

Caruana has just announced that there will be tax cuts in this Budget.

"This year I am proud to say that this will be a tax-cut budget. We are doing this not only because it is an electoral promise, but because our economy continues to deliver results."

The Budget begins

Parliament is in session and Clyde Caruana is about to deliver his Budget speech.

Clyde Caruana meets President Myriam Spiteri Debono

Another DOI photo comes in, this time showing the Finance Minister and his team meeting with President Myriam Spiteri Debono at the Grandmaster's Palace. 

Budget ad ban

In case you missed it, earlier today Madam Justice Miriam Hayman provisionally upheld a Nationalist Party request to stop PBS from broadcasting a particular Budget ad. The party is arguing that the ad is constitutionally illegal, and until the court can take a decision on this, the public broadcaster cannot play this ad. 

Read the full story here.

JP Fabri: 'The Budget is more than an accounting exercise'

Throughout the Budget speech, JP Fabri from Seed Consultancy will be providing a live analysis of the policy measures being announced. Here is what he has to say about what this Budget could have in store for us:

"The Budget is much more than an accounting exercise. It is an economic document that has the power to stabilise the economy, allocate limited resources, distribute wealth and put forward measures that improve the administrative and regulatory arm of the Government. From initial hints, it looks like this budget will continue to support the short to medium term of the economy with a focus on consumption and social investment whilst directing the economy towards long-run sustainability."

Budget 2025: What to expect

Earlier today we attended a briefing for journalists on some of the measures that will be announced during the Budget speech. 

A little teaser: It's a straightforward Budget. Expect an increase in your disposable income. 

We already said earlier that the Budget is expected to include significant measures, among them tax reductions that are anticipated to cost the Government over €100 million. All this was said by the Prime Minister in recent weeks. 

Official photos are coming in

Here is a first look at some of the photos being issued by the Department of Information. The red bag remains a cornerstone of the Budget fanfare, while the physical copy of the Budget document is a sleek blue-red gradient print.

Caruana on his way to parliament

The President has signed off the Budget and now Clyde Caruana makes his way towards parliament.

This is also President Myriam Spiteri Debono’s first Budget since becoming Head of State.

COLA

The Cost of Living Adjustment (COLA) is expected to increase by €5 per week in 2025, down from €12.81 per week last year. The exact figure will be announced by the Finance Minister later today.

Clyde Caruna arrives at the Office of the President

Finance Minister Clyde Caruana has arrived in Valletta to present the Budget to President Myriam Spiteri Debono where she as Head of State will be granting her approval for the budget to go ahead.

What to expect tonight

The Budget is expected to include significant measures, among them tax reductions that are anticipated to cost the Government over €100 million. Prime Minister Robert Abela also indicated during a political event that increases in children’s allowance, pensions, and social benefits are also planned.

Regarding energy and fuel subsidies, Finance Minister Clyde Caruana made it clear that the Government will not yield to pressure from the European Commission to reduce or eventually stop them altogether. He noted that this is costing the Government around €460 million.

Press briefing underway

MaltaToday deputy Online Editor Nicole Meilak is currently at the Finance Ministry press briefing to get a breakdown of the measures which will be announced by Minister Clyde Caruana later today.

Gozo's infrastructure challenges

The Gozo Business Chamber (GBC) called for improved inter-island connectivity, specifically by enhancing Gozo Channel ferry services and exploring options for a fifth ferry. Additionally, they propose expanding Mġarr Port and shaking up the island's main town, Rabat with traffic and environmental improvements.

Supplementary pensions

The Insurance Association Malta and the Malta Chamber were among those to voice support for introducing mandatory workplace pensions, with an opt-out option, as the Chamber proposed tax incentives for employers who support such schemes.

Mandatory union membership

In the days leading up to Budget Day, the General Workers’ Union (GWU) proposed mandatory union membership to protect workers' rights. While employer organisations opposed this due to concerns over freedom of association, UĦM suggests it could be applied to low-income workers or in workplaces where a union has recognition.

Retirement and pension reforms

Social partners wish to see changes in the current pension system to account for shifting demographics, among other factors.

The Malta Employers' Association suggests increasing the effective retirement age, offering tax-free pensions for those still working, and discouraging early retirement. The Malta Chamber and UĦM also support incentivising supplementary pensions and tax adjustments for working spouses.

Public sector efficiency

Concerns over the efficiency and size of the public sector workforce are shared by a number of social partners. The Malta Chamber and Malta Employer's Association propose rationalising current public sector roles, implementing performance metrics, and adjusting public sector conditions, such as reducing half-day schedules, to make the private sector more competitive.

A new economic model

A number of social partners, including the Malta Chamber and the Malta Employers' Association (MEA), are once again hoping for an overhaul of Malta’s economic model. Their pre-budget documents point toward a "well-being economy" less dependent on construction and population growth, focusing on sustainable, high-value industries to improve quality of life.

In recent weeks, MaltaToday journalist Matthew Farrugia has compiled the concerns and priorities expressed by various social partners regarding specific sectors that they believe should be addressed in the Budget.

Budget Day Timeline

2pm: Finance Minister Clyde Caruana holds press briefing with media

4:30pm - The Minister leaves the Ministry and walks to the Grand Masters Palace to present the Budget to the President of the Republic Myriam Spiteri Debono

5:30pm – The Minister leaves the Grand Masters Palace and walks to Parliament

6:30pm – The Minister starts his speech in parliament

‘Partisan government propaganda’ – Nationalist Party

Meanwhile, the Nationalist Party wrote to the Broadcasting Authority over what it described as a “partisan government propaganda spot” aired on TVM.

“Not only did the spot include partisan content, but it also featured Prime Minister Robert Abela, creating political imbalance on the eve of the budget,” the PN said on Monday.

The spot featuring the Prime Minister was broadcast several times on TVM, including during and after the news. The PN said according to the law, no political propaganda of this nature can be broadcast in this manner unless it forms part of a schedule authorised by the BA. It said such spots are illegal.

"Under instructions from Opposition Leader Bernard Grech, the PN has warned that if this broadcast – which causes prejudice against the Opposition – is not stopped immediately and no action is taken by the BA by Monday, the Opposition will have no choice but to seek further legal action to halt this blatant abuse,” the PN said, calling “effective redress”.

'A Country of Quality' 

On Sunday evening, Prime Minister Robert Abela announced the theme for this year’s Budget will be ‘A Country of Quality’ (Pajjiż ta’ Kwalità).

He said Budget 2025 will kick off a process to take the country “to the next level”.

“We will prioritise quality over quantity when tackling challenges in the labour market, mobility on our roads, mental health, tourism and development,” he said.

The budget theme was unveiled on Sunday evening with an advert blitz on TVM, social media and also billboards.

Real-time expert analysis

JP Fabri from Seed Consultancy will be our resident economist throughout Finance Minister Clyde Caruana’s speech later today, breaking down the economic implications of the budget.

It’s Budget day, and we are here to break it down for you

Good morning, it’s Budget day, and MaltaToday will be providing live updates, expert analysis, and comprehensive coverage of all the key highlights, financial proposals, and their potential impact on the country's economy, businesses, and citizens.