Budget 2024:  What’s in store?

The upcoming Budget is strategically crafted to continue assisting the Maltese and Gozitan families while safeguarding the resilience of our economy, even in the face of global uncertainties, Minister for Finance and Employment, Clyde Caruana, told The Journal.

The Finance Minister’s annual statement to the House of Representatives on the nation’s finances is only five days away.

Those who are not too keen on financial jargon might feel a bit out of their element right now. However, given the volatile global situation, Government’s plans for 2024 are garnering plenty of interest, especially in view of the rising cost of living.

The upcoming Budget is strategically crafted to continue assisting the Maltese and Gozitan families while safeguarding the resilience of our economy, even in the face of global uncertainties, Minister for Finance and Employment, Clyde Caruana, told The Journal.

On Monday, Minister Caruana will unveil Malta’s financial plans for next year, which are expected to continue the trend of no tax increases, either direct or indirect.

Here are some of the key takeaways we expect from this year’s Budget Speech.

Continued energy support

It has already been declared several times that the central theme of this year’s Budget speech will be the continuation of government support in the energy sector, aimed at alleviating the impacts of escalating global energy prices.

Among the most significant ongoing initiatives, which may not always receive due recognition, is the allocation by Government of €350 million in support to prevent the rising costs of electricity and fuel which. It is estimated that, without such financial support, the utility bills and the cost of fuel would increase (by 45 cents per litre in the case of fuel), causing significant declines in households’ purchasing power.

Meeting EU criteria

According to data released by the National Statistics Office (NSO) on the 23rd October 2023, the General Government registered a deficit of €982.2 million in 2022, equivalent to 5.7 per cent of GDP. The national debt increased by €736.5 million in 2022 over the previous year, amounting to €9,000.5 million or 52.3 per cent of the GDP.

The NSO’s release was worked out in line with the procedure defined in the EU’s Maastricht Treaty (Article 104). This Treaty establishes a set of economic and fiscal guidelines that EU Member States are required to meet in order to adopt the euro as their official currency.

The EU’s Maastricht criteria were suspended with the advent of the Covid-19 pandemic. However, the EU is expected to reinforce them in 2024, and Malta must be careful to respect its obligations in this regard.

The European Commission monitors the development of the budgetary situation and of the stock of government debt. A protocol of the Maastricht Treaty specifies the reference percentages for general government deficit (which should not exceed 3 per cent of GDP), and for the gross nominal consolidated debt (which should not exceed 60 per cent of GDP).

Hence, in 2024, a shift towards a more cautious approach to government expenditure is anticipated.

COLA

COLA stands for ‘Cost of Living Adjustment’. It is an increase in wages or benefits that is typically provided to employees to help them keep up with the rising cost of living. COLAs are designed to ensure that the purchasing power of individuals’ incomes or benefits does not erode due to inflation.

The COLA for 2023 was €9.90 per week, and for 2024 it is expected to be €12.80.

In addition, supplementary payments, aimed at assisting vulnerable families, are scheduled to be repeated next year. This initiative, initially unveiled in 2021, was introduced in response to the pressing issue of the rising cost of living.

The additional supplementary payments are meant to cater to the needs of individuals reliant on social benefits and those whose income falls below the national average. In 2022, it benefited those whose earnings were lower than the average annual income of €17,796.

Recipients can anticipate an annual disbursement in the form of a cheque, the amount of which is determined by their income for the respective year and the number of dependent children within their household.

On average, beneficiaries so far received €643, with a minimum payment of €100.

Health, education, and the environment

Initiatives related to health, education, and the environment are constantly in the pipeline and will remain so next year.

With regards to health care, the Prime Minister has often reiterated the government’s commitment to funding the development of advanced healthcare facilities, aimed at enhancing resources and improving working conditions for healthcare professionals. This investment in primary healthcare is deemed essential for fostering healthier communities.

In the realm of education, students should anticipate proportional raises in their stipend, in response to the rising cost of living.

Pensioners can also look forward to similar increments in addition to their existing benefits. In fact, the Government will be allocating €100 million more in pensions.

Regarding environmental matters, while significant progress was achieved in 2023, Government is committed to upholding its ambitious 2022 electoral manifesto ‘Malta Flimkien’ (Malta Together) in this domain. The government has already pledged a seven-year, €700 million investment in the creation and upkeep of green, urban spaces.

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