Government to borrow €1.6 billion to finance €980m deficit and €445m redemptions

Government will be able to raise up to €1.6 billion this year to finance its deficit and redeem four maturing bonds, the Treasury said on Monday.

The money will be raised through the issuance of Malta Government Stocks with a maturity of more than one year.

The government’s annual borrowing plan was published by the Treasury in line with provisions of the Government Borrowing and Management of Public Debt Act.

The money raised through the new stocks will be primarily used to finance the government’s deficit, estimated at €979.9 million.

The funds will also be used to redeem four Malta Government Stocks issues and the 62+ Malta Government Savings Bond that will mature later this year for a total of €445.4 million.

The stocks will mature on 5 May (0.5% MGS 2023 IV) for €130.7 million, 19 June (62+ Savings Bond 2018) for €87.2 million, 6 July (5.5% MGS 2023 I) for €78.8 million, and 11 November (1.4% MGS 2023 III) for €146.3 million.

The Ex-Church Property Stock (7% MGS 2023 II) for a total of €2.4 million also becomes redeemable between 1 January and 31 December 2023.

The rest of the borrowing will be used to effect changes in the country’s debt portfolio “as and when required in line with government’s debt management policies”.

The Treasury said the “conventional fixed rate Malta Government Stock” shall be the primary financial instrument by which the government’s borrowing requirements will be funded.

Around five to seven bond issues will be released in 2023. “The Treasury shall retain the flexibility and capability to adapt quickly to changing market and other conditions and, where necessary will review the intervals of issuances,” the finance ministry said.

The maturity structure of the 2023 issues will be a mix of short and medium, to long-term MGS.