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Malta’s public finances through the COVID-19 pandemic

Author

Listed:
  • Juergen Attard
  • John Farrugia

Abstract

In the years prior to the pandemic, the Maltese fiscal balance swung from a deficit into a surplus and the debt-to-GDP ratio declined by over one-third. However, the subsequent pandemic related economic shock led to a fall in revenue and simultaneously, the Government introduced several fiscal support measures leading to a significant increase in the fiscal deficit. The aggressive countercyclical policy safeguarded thousands of jobs, facilitated liquidity access to businesses and protected the most vulnerable households. It is expected that the fiscal stance will remain accommodative in the near term, in line with the guidance expressed by the European Commission. Defined consolidation measures to limit the increase in public debt brought about by COVID support measures need to be implemented in a way that safeguards the recovery process. Moreover, consolidation must allow for further investment in education, infrastructure and the institutional framework – all of which boost productivity and long-run economic growth. The use of Next Generation EU funds, which includes the Recovery and Resilience Fund, can help achieve this balancing act.

Suggested Citation

  • Juergen Attard & John Farrugia, "undated". "Malta’s public finances through the COVID-19 pandemic," CBM Policy Papers PP/09/2021, Central Bank of Malta.
    • Handle: RePEc:mlt:ppaper:0921
    as

    Download full text from publisher

    File URL: https://www.centralbankmalta.org/site/Publications/Economic%20Research/2021/economic-effects-covid19-tourism-downturn.pdf?revcount=3979
    File Function: First version, 2021
    Download Restriction: no
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    References listed on IDEAS

    as
    1. Noel Rapa, 2021. "Mitigation measures, prevalence response and public mobility during the COVID-19 emergency," CBM Working Papers WP/03/2021, Central Bank of Malta.
    2. Noel Rapa, 2020. "A Sectoral Model Extension to STREAM," CBM Working Papers WP/08/2020, Central Bank of Malta.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • E66 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General Outlook and Conditions

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