The IMF says Malta will remain below a 3% deficit despite continued energy support.
The IMF's October 2025 Article IV consultation projects Malta's general government deficit narrowing below 3% of GDP from 2026 onward (3.3% in 2025 → 2.9% in 2026 → 2.4% in 2027), even with the energy-subsidy programme partially maintained. Consistent with the Maltese Finance Ministry's own projection. Caveat: the IMF explicitly recommends phasing out the subsidies, so reading the projection as IMF endorsement of the subsidy approach overstates the relationship.
The IMF's October 2025 Article IV consultation projects Malta's general government deficit narrowing below 3% of GDP from 2026 onward (3.3% in 2025 → 2.9% in 2026 → 2.4% in 2027), even with the energy-subsidy programme partially maintained. Consistent with the Maltese Finance Ministry's own projection. Caveat: the IMF explicitly recommends phasing out the subsidies, so reading the projection as IMF endorsement of the subsidy approach overstates the relationship.
We tested Abela's claim against (1) the IMF Malta 2025 Article IV Consultation Concluding Statement and Staff Report, (2) Maltese Finance Ministry's medium-term fiscal projections, (3) European Commission Excessive Deficit Procedure documentation for Malta, and (4) IMF World Economic Outlook database entries for Malta.
Mostly True. The IMF's October 2025 Article IV report on Malta projects the general government deficit at 3.3% in 2025, 2.9% in 2026, and 2.4% in 2027 — falling below the 3% Treaty ceiling from 2026 onward. The IMF acknowledges that Malta's energy subsidies are sustainable in the medium term given strong GDP growth, but recommends phasing them down to reduce contingent fiscal liability and align with EU fiscal-rule requirements. The projection 'deficit below 3% despite subsidies' is therefore correct as a forecast statement. Limitations: reading the projection as IMF endorsement of the subsidy approach overstates — the IMF sustainability assessment is based on continued strong GDP growth and assumes gradual subsidy phase-down. If wholesale energy prices spike again, or if Maltese GDP growth disappoints, the projection would tighten. Forward-looking projections of any kind are inherently subject to revision in successive Article IV consultations.
Does the IMF really project Malta's deficit will stay below 3% despite the energy subsidies
The IMF Article IV process — the standard annual consultation between the IMF and member countries — is the cleanest external benchmark on Malta's fiscal trajectory. Abela's claim is checkable against the IMF's most recent published staff report.
What the IMF Article IV actually projects
Malta's October 2025 Article IV consultation projected:
The IMF's projection: deficit falls below the 3% Treaty ceiling from 2026 onward, with continued narrowing through the late-2020s. This is consistent with the Finance Ministry's own published projections and with Malta's Excessive Deficit Procedure exit timeline (covered in claim #164).
What the IMF actually says about energy subsidies
The IMF's narrative is more nuanced than 'IMF endorses Malta's approach'. Direct paraphrase from the October 2025 staff report:
- Energy subsidies are fiscally sustainable in the medium term given Malta's strong GDP growth and low debt-to-GDP ratio.
- But subsidies are not a first-best policy — they distort signals to consumers about energy use, slow renewable investment, and consume fiscal space that could be used for targeted social transfers or infrastructure.
- The IMF recommends phasing them down, ideally with targeted transfers for vulnerable households as a substitute.
- The European Commission has made the same recommendation in the EDP context.
So Abela's claim is a selective extraction. The IMF does project Malta below 3% deficit despite continued subsidy spending. But the IMF also recommends Malta should reduce that spending. Saying 'the IMF says we can keep doing what we're doing fiscally' is true; saying 'the IMF endorses our energy-subsidy strategy' would not be.
Why the projection holds even with the subsidies
Two structural reasons:
- Malta's GDP is growing fast enough that the deficit-to-GDP ratio falls even while absolute spending stays high. Real GDP grew 5.0% in 2024 (EU's fastest); IMF projects 3-4% for 2025-2027.
- The corporate tax base has expanded materially, partly because of Pillar Two effects, partly because of strong company profitability. 2024 total tax revenue rose ~14% YoY, far ahead of nominal GDP growth.
These two effects together mean Malta can run continued energy support without the deficit worsening — but the IMF's point is that the spending is sub-optimally targeted, not that it's affordable.
So is the claim accurate?
The factual projection is correct: IMF and Finance Ministry both project the deficit narrowing below 3% from 2026, despite subsidies remaining in place. The framing — that IMF agrees with Malta's approach — overstates what the IMF actually says, which includes a recommendation to phase out the subsidies.
Verdict: Mostly True. The number is real; the spin around it is selective.