At the conclusion of their annual visit to Malta, experts from the International Monetary Fund (IMF) have once again offered a vote of confidence in the Maltese economy, highlighting the country’s remarkable performance in recent years.

The IMF experts commended Malta’s economic resilience, stating that “Malta has experienced remarkable growth over the past decade”. Despite global economic uncertainties, they expressed confidence that Malta’s economic growth will remain among the highest in Europe. The IMF is forecasting a 5% increase in national wealth for this year, with a projected 4% growth expected for the next.

One notable aspect of the IMF’s assessment is their outlook on Malta’s labour market. Experts anticipate a slowdown in the influx of foreign workers in the coming years, which they attribute to the Government’s strategic focus on high-productivity economic activities. This shift is expected to create a more sustainable economic model in the long term.

According to the IMF, Malta is “excelling in digitalisation” and is well-positioned to capitalise on the benefits of Artificial Intelligence (AI). In light of this, the IMF experts encouraged the Government to continue refining an economic strategy that prioritises innovation, education, training, digitalisation, and environmental sustainability. They also welcomed the initiation of the process to shape Malta’s Vision 2050, which will provide a long-term roadmap for the country’s development.

The IMF experts expressed agreement with the general direction of the Government’s fiscal policy. They noted that the national debt is expected to remain around 50% of national wealth, which is viewed as a prudent fiscal position. The experts also acknowledged the improvements in the tax collection system, particularly the administrative changes that have been implemented. However, they urged the Government to seize the opportunity of the upcoming changes in the business tax regime to introduce incentives aimed at increasing productivity.

As in previous years, the IMF’s report included a recommendation to phase out subsidies on electricity and fuel. The IMF argued that these subsidies, which account for 20% of the Government deficit, represent a significant drain on public finances. They suggested that the funds currently allocated to these subsidies could be better utilised for increased public investment.

However, the Government has expressed a different view, believing that the removal of these subsidies could have a detrimental effect on families and businesses, especially in the current economic climate. The Government has warned that the absence of these subsidies could harm the economy, weakening both public and private investment, and potentially destabilising public finances.

The IMF’s annual report serves as a strong endorsement of Malta’s economic trajectory, while also offering recommendations that aim to ensure the country remains on a path of sustainable growth. As Malta looks to the future, the experts’ advice on fostering innovation, improving productivity, and managing public finances will undoubtedly play a significant role in shaping the country’s economic policies in the years ahead.