COMMISSION STAFF WORKING DOCUMENT 2022 Country Report - Malta Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the 2022 National Reform Programme of Malta and delivering a Council opinion on the 2022 Stability Programme of Malta
Date: 2022-05-23
Institutions: European Commission, Secretariat-General
Subjects: Malta, economic policy, economic recovery, economic reform, energy policy, public finance, renewable energy, road transport, stability pact, stability programme, tax system

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 23.5.2022  SWD(2022) 620 final  COMMISSION STAFF WORKING DOCUMENT 2022 Country Report - Malta Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the 2022 National Reform Programme of Malta and delivering a Council opinion on the 2022 Stability Programme of Malta {COM(2022) 620 final} - {SWD(2022) 640 final}  
 
 
 
 
 
 
 
 
 
 
 
 
 
ECONOMIC AND EMPLOYMENT SNAPSHOT 

Malta remains on a path of growth 

Malta’s economy was growing faster than 
the  EU  average  before  the  COVID-19 
pandemic.  Between  2015  and  2019,  Malta’s 
annual  growth  in  real  GDP  averaged  7.2%, 
making 
fastest-growing 
economies  in  the  EU  (Graph  1.1).  Its  strong 
economic performance has been driven by the 
shift  towards  fast-growing  export-oriented 
services,  such  as  remote gaming,  finance  and 
tourism. 

it  one  of 

the 

but 

pandemic 

Malta  has  been  significantly  affected  by 
the  COVID-19 
has 
recovered rapidly. In 2020, Malta’s real GDP 
declined by 8.3%, partly due to the  disruption 
to  international  tourism (1)  and  the  drop  in 
domestic  demand  following  the  country’s 
partial  lockdown.  Consumer  spending  declined 
by  as  much  as  10.2%,  notably  in  retail  and 
hospitality.  Investment  fell  mainly  due  to  a 
drop  in  construction.  However,  the  toll  on  the 
economy  was  mitigated  by  government 
stimulus  measures  to  cushion  the  income 
shock (2)  and  support  employment.  In  2021 
improved  business  and  consumer  sentiment, 
strong 
investment,  and  the  reopening  to 
tourists  supported  the  economy,  which  is 
estimated  to  have  grown  by  9.4%.  In  2022, 
affected by disruptions related to the Russia’s 
invasion  of  Ukraine,  real  GDP  growth 
is 
forecast  to  decline  to  4.2%,  although  Malta 
has  low  direct  exposure  to  trade  with  Russia 
and  Ukraine.  In  2023,  growth  is  expected  to 
remain  fairly  strong  at  4.0%  as  domestic 

(1)  The Maltese tourism value chain (direct and spill-over 

effects) was responsible for over 18% of total 
employment in 2019 (JRC121262). 

(2)  European Commission Quarterly Report on the Euro 
Area (QREA), Vol. 20, No 4 (2021), Chapter I on 
Assessing the cushioning role of tax-benefit systems on 
households’ income in the euro area during the COVID-
19 pandemic: a microsimulation analysis. 

2 

demand  and  exports  recover,  supported  also 
by  the  implementation  of  the  recovery  and 
resilience plan (RRP) (3) (see Annex 18). 

Graph 1.1: Economic growth, 2010-2021 (% 
per year) 

Source: Eurostat 

Inflation  in  Malta  is  picking  up.  Consumer 
prices  increased  only  moderately,  by  0.7%,  in 
2021,  helped  by  government  intervention  and 
hedging  contracts  in  the  gas  sector.  Going 
forward,  while  the  Maltese  economy  is  highly 
energy  intensive,  the  share  of  energy  in 
household  consumption  is  low  compared  to 
the other EU Member States. Nonetheless, the 
increase  in  the  prices  of  food  and  imported 
goods,  a  gradual  recovery  in  the  tourism  and 
hospitality sectors, and the impact of Russia’s 
invasion  of  Ukraine  are  set  to  drive  up  price 
pressures in 2022. After increasing to 4.5% in 
2022,  inflation  is  expected  to  fall  to  2.6%  in 
2023. The Maltese authorities have expressed 
their  commitment  to  seek  to  contain  the 
increase  of  domestic  energy  prices  so  as  to 
mitigate  negative  effects  for  the  Maltese 
population. 

(3)  For more information, see 

https://ec.europa.eu/info/business-economy-
euro/recovery-coronavirus/recovery-and-resilience-
facility/maltas-recovery-and-resilience-plan_en  

-20.-15.-10.-5.0.5.10.15.20.201020112012201320142015201620172018201920202021EUMalta 
                                                 
  
                                                 
 
from 

Employment continued to increase during 
the  COVID-19  pandemic,  albeit  at  a 
slower  rate.  Malta’s  employment 
rate 
continued to grow and reached 78.6% in 2021. 
The  fall  in  hours  worked  was  cushioned  by 
short-time  work  measures  adopted  by  the 
government,  which  benefitted 
the 
support of the EU’s SURE instrument (‘Support 
in  an 
to  mitigate  Unemployment  Risks 
Emergency’, under which EUR 420 million was 
disbursed (see Annex 3)). Employment is set to 
further grow in 2022. The unemployment rate 
increased  to  4.4%  in  2020  (remaining  well 
below  the  EU  average),  and  recovered  to  its 
all-time  minimum  of  3.5%  in  2021.  The 
indicators 
youth 
unemployment  rates  in  the  Social  Scoreboard 
supporting the European Pillar of Social Rights 
are also well below the EU  average. However, 
the  gap  between  the  employment  rates  of 
men and women in Malta remains one of the 
widest  in  the  EU  (16.8  pps  vs  EU  10.8  pps  in 
2021),  though  registering  one  of  the  highest 
decreases  in  percentage  points  within  the  EU 
over the last decade (see Annex 12). This gap 
is  also  present  in  key  areas,  for  example, 
women  working  as  ICT  specialists  represent 
only 11% of the total (against an EU average 
of 19%) (4). 

long-term 

and 

for 

labour  market  and 

Labour  shortages  and  skills  mismatches 
are  significant  across  sectors.  Due  to  a 
tight 
relatively  poor 
education outcomes, shortages of workers and 
skills  have  increased  in  recent  years.  The 
COVID-19  pandemic  and  the  twin  transition 
are expected to exacerbate these shortages in 
certain  sectors  such  as  ICT,  tourism,  health 
and long-term care. The challenges are fuelled 
by  one  of  the  highest  shares  of  low-skilled 
workers in the EU (36% vs EU 24.9% in 2021), 
the  limited  participation  of  low-skilled  adults 
(25-64)  in  learning (5),  and  the  high  share  of 

(4)  Digital Economy and Society Index 2021.  

(5)  The reference period for participation in education and 
training is the 4 weeks prior to the interview. The 
indicator for adult learning participation over the 
previous 4 weeks is used in the country report, rather 
than the indicator on learning over the previous 12 
months. This is because Adult Education Survey (AES) 
data for the 12-month indicator are only available for 
2016 at the moment, while the new Labour Force 
Survey (LFS) indicator agreed for use in the social 

3 

early school leavers (11% vs EU 9.7%), despite 
significant improvements in the latter in recent 
years.  Moreover,  a  large  percentage  of  pupils 
fail  to  achieve  a  minimum  proficiency  level, 
is 
and  underachievement 
particularly 
disadvantaged 
students.  

in  basic  skills 

among 

high 

The  overall  poverty  risk  remains  below 
the  EU  average,  but  some  groups  face  a 
particularly  high  risk.  In  2020,  the  at-risk-
of-poverty-or-social-exclusion  (AROPE)  rate  of 
the total population was around 20%, slightly 
below  the  EU  average  of  around  22%. 
However,  this  rate  is  much  higher  among 
people  with disabilities,  non-EU  nationals,  and 
people  aged  over  65.  The  Social  Scoreboard 
indicator  on  the  impact  of  social  transfers 
(other than pensions) on poverty reduction has 
been  steadily  decreasing  for  the  past  few 
years and is much lower than the EU average 
(see  Annex  12).  However, 
level  of 
minimum income, when compared to both the 
poverty line and a low earner’s wage, is above 
the  EU  average.  While  still  below  the  EU 
average, the in-work poverty risk continued to 
increase,  by  0.9  pps  (compared  to  2019)  and 
is  particularly  high  for  non-EU  born  people 
(15.7% vs 6.6% for native-born). 

the 

contributing 

The public debt-to-GDP ratio is increasing 
but  remains  slightly  below  the  60% 
threshold. The government deficit diminished 
from  9.5%  of  GDP  in  2020  to  8%  of  GDP  in 
2021.  Higher  government  revenues  are  the 
factor.  The  expected 
main 
economic  rebound  and  the  gradual  unwinding 
of COVID-19 measures are expected to further 
reduce  the  deficit  in  2022  and  2023  even 
considering measures to cushion the impact of 
energy  price  increases.  The  government  debt-
to-GDP ratio is estimated to have increased to 
57%  in  2021  and  is  forecast  to  increase  to 
59.5% in 2023.  

Demographic changes and a high share of 
income  tax  weigh  on  the 
corporate 
sustainability  of  government  finances  in 
the long term. Ageing costs will rise with the 
expected  increase  in  expenditure  on  pensions, 

scoreboard and as the 2030 headline target on skills 
will only be available in 2023. 

 
                                                 
                                                                        
healthcare  and  long-term  care.  While  Malta 
remains  highly  reliant  on  corporate  income 
taxes,  implying  greater  vulnerability  to  future 
economic  shocks,  the  country  commits  to 
curbing  the  room  for  some  aggressive  tax 
planning  practices,  yet  significant  shortfalls 
remain (see Section 3).  

reducing 

Achieving  environmentally  sustainable 
economic  growth  remains  one  of  Malta’s 
key  challenges.  Among  others,  Malta  is 
struggling  to  achieve  sustainable  mobility, 
traffic  congestion  and 
meaning 
decarbonising transport, as well as broadening 
the  uptake  of  renewable  energy  and  energy 
efficiency 
initiatives.  The  high  volume  of 
generated  construction  and  demolition  waste 
and municipal waste  along with the low rates 
of  recycling  also  remain  major  challenges. 
Malta  is  also  the  furthest  off  track  of  any 
Member  State  to  meeting  its  2030  Effort 
Sharing  Regulation  (ESR)  emission  reduction 
target. 
effective 
implementation  of  Malta’s  Low  Carbon 
Development  Strategy,  which  addresses  the 
attainment of the 2030 ESR target and paves 
the  way  for  the  transition  to  a  low  carbon 
economy,  will  have  a  key  role  to  play.  As  a 
small island state in the Mediterranean, Malta 
faces 
achieve 
environmentally  sustainable  growth  and  is 
risks, 
particularly  vulnerable 
underscoring the need for bespoke climate and 
environmental policies. 

challenges 

respect, 

climate 

several 

this 

to 

to 

In 

ensure  the  sustainability  of  the  country’s 
growth model. 

in 

are 

the 
Long-standing  weaknesses 
being 
framework 
institutional 
addressed.  The  RRP  includes  crucial  reforms 
to strengthen the judiciary’s independence (see 
Annex 11) and the fight against corruption and 
money laundering. This is expected to increase 
transparency,  raise  trust  in  institutions  and 
promote  good  governance.  The 
improved 
business  environment  will  provide  a  solid 
foundation  for  investment  and  productivity 
growth. 

Malta’s  direct  exposure  to  possible 
impacts of Russia’s invasion of Ukraine is 
fairly  limited.  Direct  exposure  to  Russian 
debt  and  equity  is  very  low  while  the  overall 
capital  adequacy  and  liquidity  position  (see 
Annex  16)  of  the  financial  sector  make  it 
resilient  to  various  shocks.  Malta's  domestic 
value  added  embodied  in  exports  to  Russia 
accounts for only 0.4% of GDP (6). Exports are 
mostly  concentrated 
in  the  tourism  and 
professional  services  sectors.  Malta  does  not 
import  gas  or  oil  from  Russia.  Its  exposure  to 
Russia  is  indirect  via  its  electricity  imports 
from  Italy.  Malta’s  share  of  renewables  in  its 
energy  mix  is  rather  low.  Its  exposure  to 
international  price  hikes  and  volatility  of 
energy  prices  could  be  further  mitigated  if  it 
were 
towards 
renewables. 

to  speed  up 

the  move 

to  strengthen 
Efforts  are  ongoing 
innovation,  education  and  skills.  Malta’s 
strong  economic  performance  in  recent  years 
has  been  driven  by  the  shift  towards  fast-
growing  export-oriented  services  (see  Annex 
10),  such  as  remote  gaming,  finance  and 
tourism.  These  developments  were  helped  by 
the  inflow  of  foreign  workers  that  boosted 
labour supply  and enabled a strong growth in 
jobs.  Maltese  real  labour  productivity  per 
person in the pre-crisis period grew faster than 
the  EU  average,  also  benefiting  from  fast 
digitalisation  and  productivity  gains  within 
sectors 
is  putting 
considerable  effort,  including  in  the  RRP,  into 
increasing  skills  and  the  quality  and  labour 
market 
relevance  of  education,  fostering 
innovation potential, which is expected to help 

(see  Annex  9).  Malta 

further 
the 

progress 
UN’s 

Overall,  Malta  is  performing  well  and 
towards 
making 
reaching 
Sustainable 
Development Goals (SDGs). Malta generally 
performs  very  well  or  well  on  poverty  and 
health SDG indicators (SDG 1, 3, 8, 10) and is 
improving  on  SDG  indicators  assessing  the 
fairness of society and the economy (SDG 2, 4, 
5).  Further,  it  performs  very  well  on  decent 
work and economic growth (SDG 8) as well as 
macroeconomic  stability  (SDG  16)  and  is 
indicators  relating  to 
improving  on  SDG 
productivity  (SDG  4,  9).  While  Malta  performs 

(6)  Total value added embodied in exports to Russia, 

including direct exports and indirect linkages through 
value chains, Source: JRC calculations based on the 
Eurostat 2019 FIGARO EU inter-country supply, use and 
input-output tables. 

4 

 
                                                 
very well on affordable and clean energy (SDG 
7) and is improving on several  SDG indicators 
for environmental sustainability (SDG 2, 9, 12, 
13),  Malta’s  share  of  renewable  energy  in 
gross  final  energy  consumption  is  at  10.7%  - 
although improving  -  less than half of the EU 
average  in  2020  (22.1%).  In  addition,  it  still 
needs  to  catch  up  on  making  its  cities  and 
communities  more  sustainable  (SDG  11)  (see 
Annex 1). 

5 

 
THE RECOVERY AND RESILIENCE PLAN IS UNDERWAY 
THE RECOVERY AND RESILIENCE PLAN IS UNDERWAY 

investment  and 

Malta is set to receive EUR 316.4 million 
in  grants  under  the  Recovery  and 
Resilience  Facility over  2021-2026.  These 
funds,  equivalent  to  2.3%  of  Malta’s  2019 
GDP,  will  contribute  to  implementation  of  the 
reform  measures 
crucial 
outlined in the Maltese recovery and resilience 
plan  (RRP),  which  was  adopted  in  autumn 
2021 (see Annex 2). The RRP is ambitious and 
long-standing  challenges 
aims  to  address 
identified  in  the  areas  of  climate  and  digital 
transition,  health,  employment,  education  and 
skills,  social  policies,  justice,  and  the  fight 
against corruption and money  laundering (see 
Annex 4). 

and  the  greening  of  private  and  public 
buildings,  including  a  hospital  and  schools, 
following  the  adoption  of  the 
long-term 
renovation  strategy  in  2021.  Work  on  school 
projects,  including  the  construction  of  a  near-
carbon-neutral  school,  is  advancing  and  is 
expected  to  be  completed  in  2023.  Other 
measures  focus  on  improving  the  circular 
economy  and  reducing  the  environmental 
impact  of  waste.  Key  measures  include  the 
adoption  of  the  construction  and  demolition 
waste  strategy 
in  2021  as  well  as  the 
introduction  of  standards  for  the  construction 
the  waste 
industry  and 
collection system, both planned for 2022.  

reform  of 

the 

to 

climate 

dedicated 

Malta’s  RRP  is  expected  to  contribute 
substantially  to  the  country’s  green 
transition.  With  54%  of  the  plan’s  total 
allocation 
and 
environmental  objectives,  it  includes  several 
measures  to  address  the country’s  challenges 
in this area including the need to reduce traffic 
congestion  and  GHG  emissions,  decarbonise 
transport  and  achieve  sustainable  mobility. 
Key  initiatives  include  the  electrification  of 
public and private road transport and a reform 
granting free public transport to all persons in 
Malta in possession of the personalised travel 
card (Tal-linja card). The construction of a new 
ferry  landing  site  is  expected  to  contribute  to 
the  modal  shift  from  road  to  maritime 
transport. In 2021, 15 office facilities were set 
up for teleworking in the public sector, and an 
agreement  was  signed  in 2020  with  the  local 
the  creation  of 
councils’  association  on 
regeneration areas in urban areas to promote 
walking, cycling and public transport.  

Other  RRP  actions  address  challenges 
related  to  the  sharp  increase  in  energy 
consumption  and  waste  generation.  Both 
of 
in 
from 
population,  employment,  construction  and 
other  activities  in  Malta  in  recent  years.  The 
includes  energy-efficiency  renovations 
RRP 

rapid  growth 

result 

these 

includes  measures  to 
The  RRP  also 
accelerate the digital transition in Malta, 
primarily  focused  on  the  public  sector. 
The  RRP  dedicates  26%  of  its  total  allocation 
towards  digital  objectives.  Its  key  measures, 
such  as  strengthening  the  reliability  and 
cybersecurity  of 
the  government  digital 
backbone  and  further  digitalising  the  public 
the 
administration,  will  help  strengthen 
government’s IT systems and further increase 
the  uptake  of  digital  public  services  (on  the 
state  of  public  administration,  see  Annex  11). 
Supporting investments in digitalisation among 
at least 360 companies by 2026 will also help 
advance the digitalisation of the private sector. 
The  implementation  of  these  measures  is 
currently underway. Furthermore, to accelerate 
research  and  innovation  (R&I),  Malta  has 
published  a  smart  specialisation  strategy, 
which focuses on six thematic areas, including 
artificial 
digital 
intelligence  and  blockchain,  and  aims 
in 
particular  at  fostering  business  R&I  and 
strengthening public-private cooperation. 

technologies 

such 

as 

The  RRP 
includes  a  wide  range  of 
measures  to  increase  the  resilience  and 
sustainability  of  the  health  sector.  The 
reform promoting the integration and well- 

6 

 
 
 
Box 1: 

Key deliverables under the RRP in 2022-23 

 

Introduction of transfer pricing rules to reduce corporate profit shifting opportunities. 

  Attorney  General’s  office  recruiting  31  officers  to  support  the  shift  in  prosecution 

services.  

  Contracts signed for the energy efficient renovation of public buildings. 

 

Planning authority permit issued for a new ferry landing site in Buġibba, St Paul’s Bay 
with mitigating measures to ensure no significant harm to the environment.  

  1000 grants awarded for the purchase of electric vehicles in the private sector. 

  Contracted services for the construction of a Blood, Tissue and Cell Centre.  

 

 

E-college is operational offering training courses and guidance to all adults.  

Reform of the waste collection system by setting up five municipal waste bodies.  

being  of  foreign  health  workers  and  the 
investment in establishing a Blood, Tissue and 
Cell Centre, both expected to be completed by 
2025, will enhance the resilience of the sector 
also  by  providing  services  for  which  patients 
previously  had  to  travel  abroad.  The  ongoing 
digitalisation  of  the  new  outpatient  facility  at 
Mater  Dei  Hospital  will  facilitate  interaction 
between patients and health professionals and 
improve treatment.  

of 

training, 

challenges 
the 

in 
The  RRP  addresses 
labour 
education  and 
unemployment 
the 
and 
market, 
protection  and  pension  systems,  thus 
supporting 
the 
implementation 
European Pillar of Social Rights. It includes 
key  reforms  and  investments  such  as  early 
school  leaving  prevention  and  intervention 
measures,  expanded  upskilling  and  reskilling 
opportunities  and  guidance  for  all  adults  (in 
particular  the  low-skilled),  and  improving  the 
quality  and  inclusiveness  of  education.  To 
strengthen  gender  equality,  the  RRP  further 
includes  the  implementation  of  key  measures 
contained  in  the  forthcoming  gender  equality 
and  mainstreaming  strategy  action  plan.  It 
for  dedicated  activation 
also  provides 
measures 
review  and 
monitoring  of  pension  and  unemployment 
benefits  aim  at  ensuring  adequacy  and 
sustainability. 

for  women.  The 

The  Maltese  RRP  addresses  a  number  of 
long-standing  institutional  challenges  in 

7 

to 

to 

strengthen 

the  procedures 

the areas of justice and the fight against 
corruption.  Reforms  aim  to  strengthen  the 
the 
independence  and  effectiveness  of 
judiciary  through  several  measures,  including 
changes  made 
for 
appointing  members  of  the  judiciary  (see 
Annex  11).  Malta  began  the  process  of 
transferring the prosecution of cases from the 
police  to  the  Attorney  General.  The  RRP  also 
includes  measures 
the 
institutional  framework’s  capacity  to  fight 
corruption; 
include 
implementation of the national anti-fraud and 
corruption  strategy  that  was  adopted  in  May 
2021;  reform  of  the  Asset  Recovery  Bureau; 
and  several  reforms  targeting  the  Permanent 
Commission  Against  Corruption. 
Robust 
national  anti-corruption  frameworks  and  their 
effective  enforcement  are  crucial  for  the 
prevention,  detection  and  deterrence  of 
corruption,  fraud  and  financial  irregularities, 
and  the  abuse  of  office  and  conflicts  of 
interest. 

measures 

these 

The  Maltese  RRP  also  commits  to  closing 
off some features of the tax system that 
enable  aggressive  tax  planning.  These 
include  the  introduction  of  transfer  pricing 
legislation  and  a  study  on 
inbound  and 
outbound payments of dividends, royalties and 
interest to and from low tax jurisdictions, to be 
followed  by  legislation  based  on  the  study’s 
findings  in  the  later  years  of  the  RRP.  These 
measures  only  partly  address  the  existing 
challenges, but are a step in the right direction.  

 
 
Another  relevant  priority  under  the  RRP 
in  2023  will  be  to  strengthen  Malta’s 
anti-money 
framework, 
laundering 
including  via  implementation  of  the  strategy 
and  action  plan  for  2021-2023.  Furthermore, 
Malta  commits  to  implementing  by  December 
2023,  all  recommendations  provided  by  the 
Financial  Action  Task  Force  in  its  June  2021 
assessment. 

8 

 
FURTHER PRIORITIES AHEAD 
FURTHER PRIORITIES AHEAD 

Beyond  the  challenges  addressed  by  the 
recovery  and  resilience  plan  (RRP),  as 
outlined  above,  Malta  faces  additional 
challenges not sufficiently covered in the 
plan. More effort  will be required to progress 
on  a  set  of  priority  challenges,  most  notably 
on  ensuring  environmental  sustainability; 
tackling 
boosting equal 
opportunities  for  all;  strengthening  fiscal 
sustainability  and  addressing 
remaining 
features of the tax system that may facilitate 
aggressive 
tax  planning;  and  enhancing 
productivity  through  research  and  innovation. 
Addressing  these  challenges  will  help  make 
further progress in achieving the relevant SDG 
indicators (see Annex 1). 

poverty 

and 

Ensuring environmental 
sustainability 

recycling 

transition 

trend.  The 

While  Malta  has  a  strong  focus  on  the 
its  RRP,  some 
in 
green 
persisting  challenges  are  insufficiently 
tackled  (see  Annex  5).  Municipal  waste 
generation in Malta stood at 697 kg per capita 
in 2019 (EU average, 502 kg per capita), which 
is  among  the  highest  in  the  EU  and  on  an 
increasing 
rate  of 
municipal  waste  was  only  9.1%  in  2019,  far 
below  the  EU  average  of  48%  and  the  2020 
target  of  50%.  Landfill  rates  are  high  and  on 
an  increasing  trend  from  a  level  of  79.5%  in 
2017 to 91.5% in 2019. The reform of waste 
collection system under the RRP is expected to 
contribute  to  address  certain  weaknesses  of 
the  collection  process  such  as  fragmentation 
and  lack  of  scale  economies.  Waste-related 
taxes  and  charges  are  practically  absent  in 
Malta. This creates inappropriate incentives for 
waste  prevention  and  recycling.  Malta  has  no 
landfill tax in place and the landfill gate fee is 
relatively  low  (approximately  20  €/t)  when 
compared  to  the  cost  of  the  landfilling  of 

waste (above 70 €/t) and the potential impacts 
to  human  health  and  the  environment.  In 
2021,  Malta  adopted  its  Waste  Management 
Plan for 2021-2030. 

Protection of biodiversity continues to be 
an  unresolved  challenge  in  Malta.  The 
Natura  2000  designation  process  and  the 
management  plans  for  marine  sites  are  not 
yet completed in line with the Habitats and the 
Birds  Directives,  which  hinders  wildlife 
conservation efforts (see Annex 5). Illegal bird 
hunting  and  trapping  practices create  further 
problems for wildlife. Biodiversity on farmland 
and natural areas needs improving.  

of 

and 

transport 

congestion 

remains  a  key 
Traffic 
challenge,  given  the  high  reliance  on 
private  cars.  The 
lack  of  soft  mobility 
infrastructure (such as pavements and cycling 
lanes)  discourages  the  use  of  alternative 
modes 
exacerbates 
congestion  in  Malta.  The  building  of  separate, 
safe  bicycle  lanes  could  encourage  cycling (7), 
provide for safer use of e-scooters and bolster 
the  uptake  of  grants  for  electric  bicycles 
provided  for in  the  RRP.  Improving the  overall 
service quality of the public transport system - 
its  comfort,  availability  and  punctuality  - 
including  by  providing  reserved  bus  lanes, 
could  facilitate  the  modal  shift  and  reduce 
congestion,  emissions  and  pollution (8)  (see 
Annex  5).  Deployment  of  mobility-related  IT 
services  and 
(intelligent 
transport  systems)  could  also  be  beneficial  in 
improving traffic flows. 

interconnections 

(7)  The preliminary results of the 2021 National Household 

Travel Survey indicate that 17.3% and 12.6% of 
respondents who do not cycle cited road safety 
concerns and poor quality of cycling infrastructure 
respectively as their main reasons for not cycling.  

(8)  The preliminary results of the 2021 National Household 
Travel Survey indicate that the main reasons why 
people do not use public transport (notably buses) more 
are that buses are not punctual, followed by the 
perception that the bus takes too long to reach its 
destination. 

9 

 
 
                                                 
 
on 

private 

reliance 

cars 
Malta’s 
translates 
into  high  share  of  gas 
oil/diesel in its final energy consumption. 
While  Malta’s  environmental  tax  revenues,  at 
2.3% of GDP, rank close to the EU average, the 
share  of  gas  oil/diesel 
in  final  energy 
consumption  is  the  sixth  highest  in  the  EU. 
While  Malta’s  road  licence  fee  is  currently 
the  engine  size  and  vehicle 
based  on 
emissions,  smart  road-pricing  systems  that 
also  consider  the  time  of  day  and  distance 
travelled would provide a fairer pricing system 
more closely tied to the polluter-pays principle 
and may better target traffic congestion.  

Malta’s  energy  mix 
is  predominantly 
made  up  of  oil  and  natural  gas,  with 
indirect  exposure  to  Russian  gas (9)  (see 
Annex 5). Malta imports none of its gas or oil 
from Russia (10).  However, approximately 20% 
of  Malta’s  electricity  consumption  is  imported 
through 
interconnector  with 
Sicily (11),  with  Italy  depending  on  Russia  for 
43% of its gas, 11% of its oil. Malta plans to 
make use of EU funding instruments to build a 
second electricity interconnector. 

its  electricity 

Malta  has  one  of  the  lowest  shares  of 
renewables  in  energy  consumption  in  the 
EU (see Annexes 1 and 5). It was able to meet 
its 2020 renewable energy target of 10% (12). 
However,  Malta’s  national  energy  and  climate 
plan  (NECP) (13)  includes  a  weak  contribution 
from  renewable  energy  of  only  11.5%,  well 

(9)  Source: Eurostat (2019/2020 data) and Policy scenarios 
for delivering the European Green Deal (europa.eu) 
(PRIMES projections for a scenario compatible with the 
Fit for 55 scenario) (2030 data) 

(10)  Eurostat (2020), share of Russian imports over total 
imports of natural gas, crude oil and hard coal. For 
Malta, total imports include intra-EU trade. Crude oil 
does not include refined oil products. 

(11)  In 2019 and 2020, Malta imported 25% and 17% of its 
total electricity supply respectively from the electricity 
interconnector. (Source: National Statistics Office, News 
Release 181/2021) 

(12)  Malta has slightly overachieved its 2020 renewable 

energy target of 10% in gross final energy 
consumption, and thanks to statistical transfers 
(representing 0.31%) it reached 10.7% share of energy 
from renewable sources. (Source: Eurostat – SHARES 
(Renewables) Energy - Eurostat (europa.eu)) 

(13)  For more information, see Malta‘s National Energy 

Climate Plan (December 2019) 

below  the  2030  EU  target.  There  is  currently 
no  wind 
installed  capacity  for  electricity 
production  in  Malta  and  in  its  NECP  the 
deployment of wind onshore or offshore is not 
planned.  Since  only  EUR  5  million  of  Malta’s 
RRP  has  been  allocated  to  renewable  energy 
could  benefit 
investments,  Malta 
from 
in  technologies  that 
enabling 
investments 
its  solar  and  wind 
could  further  exploit 
include  floating 
potential.  Measures  could 
offshore 
local 
renewable  energy  generation 
(such  as 
renewable energy communities), strengthening 
Malta’s 
fostering 
renewable  energy  storage  and  introducing 
incentives  to  reduce  energy  demand  during 
peak periods.  

technology, 

promoting 

electricity 

network, 

savings 

in  such 

Energy  efficiency  in  buildings  remains 
one of the major challenges of the energy 
transition.  The  buildings  sector  is  key  to 
meeting the 2030 energy efficiency objectives 
and  long-term  decarbonisation  goals.  Malta’s 
RRP  does  not  support  the  renovation  of 
existing  residential  building  stock,  which  has 
experienced  a  steady  increase  in  final  energy 
consumption  since  2016  (see  Annex  5).  Mild 
limit 
climate  conditions  could  potentially 
energy 
from  energy  efficiency 
renovations. However, Malta’s harsh summers, 
and the sharp increase in electricity demand to 
cool  property, would still make it beneficial to 
invest 
renovations.  The  proper 
implementation of the Energy Performance of 
Buildings  Directive (14)  and 
strengthened 
regulatory  standards  for  new  and  existing 
buildings,  together  with  a  switch  to  greener 
heating and cooling systems, could reduce the 
energy demand of buildings. Not enough use is 
made of other financial and fiscal instruments, 
such as favourable loans, tax  exemptions and 
tax reductions, which could broaden the depth 
reach and accelerate the pace of renovations, 
residential  and  non-residential 
for  both 
buildings.  Fostering  energy  renovation  of 
worst-performing  buildings,  boosting  deep 
renovation  of  dwellings,  and  prioritising 
support  for  vulnerable  consumers  would 
reduce  energy  poverty  and  increase  thermal 

(14)  Directive 2010/31/EU of the European Parliament and 

of the Council of 19 May 2010 on the energy 
performance of buildings, OJ L 153, 18.6.2010, p. 13–
35  

10 

 
                                                 
                                                 
Illegal  groundwater  abstraction 
metered. 
activities however persist but Malta makes use 
of  enforcement  tools  to  counteract  these 
illegal  activities.  Operators  of  groundwater 
sources  (self-abstractors)  pay  all  capital  and 
operational  and  maintenance  costs  related  to 
their abstraction activity. In addition, there are 
ongoing  efforts  to  explain  to  farmers  the 
’hidden’ cost linked to groundwater production 
and the advantages which may be obtained by 
shifting  to  reclaimed  water.  Finally,  better 
rainwater  catchment  could  help  reduce  the 
problem  of  flooding  in  certain  areas  while 
preserving a scarce resource in Malta. 

Tackling poverty and boosting 
equal opportunities 

Poverty figures are below the EU average 
in  general,  but  continue  to  be  high  for 
specific groups. While  the overall at-risk-of-
poverty-or-social-exclusion  (AROPE)  rate  was 
slightly  below  the  EU  average  (19.9%  vs  EU 
21.6%)  in  2020,  the  percentage  is  much 
higher for non-EU nationals, people aged over 
65,  and  for  people  with  disabilities  (30.1%) 
than for the overall population (also see Graph 
3.1).  In  particular,  women  over  65  are  at  risk 
of  poverty  or  social  exclusion  (30.0%)  given 
their  low  activity  rates  and  one  of  the  widest 
gender  pension  gaps  in  the  EU.  Malta  spends 
comparatively  less  on  social  protection  (12% 
of public expenditure in 2020 vs 21.9% in the 
EU).  The  poverty  reduction  effect  of  social 
transfers 
than  pensions)  declined 
further in 2020 to 21% (from 30.6% in 2018), 
and is substantially lower than the EU average 
(33.2%). 
activation 
measures  and  ensuring  adequacy  of  social 
benefits  in  view  of  Malta’s  strong  economic 
performance  and  the  rising  cost  of  living 
would  contribute  to  reaching  the  2030  EU 
headline target on poverty reduction. 

Continuing 

targeted 

(other 

comfort  while  reducing  GHG  emissions.  The 
environmental  goods  and  services  sector  in 
Malta provides jobs for 1.6% of the employed 
population  (versus  2.1%  in  the  EU),  while 
renewable  energy  potential  and  energy-
efficiency 
offer  major 
opportunities  for  creating  green  jobs  (see 
Annex 6). 

improvements 

is  particularly  vulnerable 

Malta 
to 
climate  risks.  Over  1980-2020,  Malta  had 
among  the  highest  total  economic  losses  in 
the  EU  caused  by  weather-  and  climate-
related  extreme  events  per  square  kilometre, 
in  part  because  of 
its  high  population 
density (15). Flash floods (16)  are already being 
experienced  and  Malta  will  increasingly  face 
severe  storms,  hail,  flooding,  soil  and  coastal 
erosion  and  high  winds.  Such  climate  hazards 
will  cause  significant  additional  economic  and 
relatively  high 
societal  damages.  Malta’s 
climate-related  insurance  protection  gap (17) 
may also present an impact on public finances. 

Malta is a water-scarce country, which is 
exacerbated  by  intense  heatwaves  and 
increasing  numbers  of  incoming  tourists. 
The  long  periods  of  drought  and  limited 
rainfall have contributed to Malta’s significant 
water  scarcity  challenge (18).  Malta’s  water 
supply base primarily depends on groundwater 
desalination. 
abstraction 
Important  investments  are  being  made  in 
water 
to 
investments  in  energy  efficiency  the  cost  of 
desalinated  water  has  been  significantly 
regulate 
reduced;  whilst 
to 
groundwater  abstraction  have 
seen  all 
registered  (and  hence  legal)  sources  being 

recent  years,  due 

seawater 

efforts 

reuse. 

and 

In 

(15)  European Environment Agency, Economic losses and 

fatalities from weather- and climate-related events in 
Europe, https://www.eea.europa.eu/ims/economic-
losses-from-climate-related. 

(16)  Flash floods are sudden and severe floods caused by 
rapid and excessive rainfall in a short period of time, 
typically less than 6 hours, but often sooner.  

(17)  Estimate derived from combining hazard, vulnerability, 
exposure and insurance coverage. Source: The pilot 
dashboard on insurance protection gap for natural 
catastrophes | Eiopa (europa.eu).  

(18)  For more on Malta’s water scarcity, see 2020 country 
report: 2020-european_semester_country-report-
malta_en.pdf (europa.eu). 

11 

 
                                                 
Graph 3.1: At-risk-of-poverty or social 
exclusion (AROPE) rate for different age 
groups and nationalities 

At  2.8%,  the  rate  of  housing  cost  overburden 
in Malta is one of the lowest in the EU (7.9%). 
However,  the  figure  has  doubled  since  2016, 
reflecting  the  tightening  of  the  rental  market 
brought  about  by  changes  in  the  country’s 
demographics.  Non-nationals  face  a  much 
heavier  burden  with  a  rate  of  25%,  against 
2.1% for Maltese citizens. 

Strengthening fiscal sustainability 

Source: Eurostat, EU-SILC [ilc_peps01n, ilc_peps01n] 

strongly 

challenges, 

Tackling  child  poverty and promoting  the 
social  inclusion  of  all  children  remain 
challenges.  Overall,  the  share  of  children 
aged  0-17  at  risk  of  poverty  or  social 
exclusion  declined  to  22.6%  in  2020,  below 
the  EU  average  of  23.9%.  However,  some 
groups  of  children  are  at  greater  risk  of 
poverty  or  social  exclusion,  including  those 
with single  parents (50.7%)  and in low-skilled 
households  (42.7%).  Equality  of  opportunities 
socio-economic 
poses 
background 
student 
outcomes,  significantly  increasing  the  risk  of 
future  poverty  and  social  exclusion.  Around 
51%  of  pupils  from  the  bottom  socio-
economic  quartile  fail  to  achieve  a  minimum 
level  of  skills  in  reading  (compared  to  34.8% 
at EU level). This is more than twice the rate of 
underachievement  within  the  top  quartile  - 
although  the  underachievement  rate  for  the 
top quartile is also high (24.3% vs EU 9.3%). In 
addition, educational outcomes vary according 
to  the  type  of  schools  attended,  with  a  gap 
between private and public schools equivalent 
to more than two school years (see Annex 13). 

as 
influences 

While  still  below  the  EU  average,  income 
inequality  indicators  rose  in  2020.  In 
2020,  the  share  of  total  income  received  by 
the  20%  of  the  population  with  the  highest 
income  was  4.7  times  higher  than  the  share 
received  by  the  20%  of  the  population  with 
the lowest income, against 4.2 times in 2019. 

is 

to 

The  sustainability  of  Malta’s  public 
finances 
important 
subject 
challenges  in  the  long  term.  Significant 
gains in life expectancy and an increase in the 
share of very elderly population above the age 
of 80 (from 4.3% of total population in 2019 
to  estimated  13.2%  in  2070)  will  drive  up 
pensions, 
care 
and 
expenditure (see Annex 19). 

long-term 

health 

public 

lowest 

elevated 

Pension expenditure is the main driver of 
sustainability 
the 
fiscal 
challenges. 
pension 
In  2019, 
expenditures  in  Malta  stood  at  7.1%  of  GDP, 
in  the  EU.  However, 
among  the 
according  to  the  2021  Ageing  Report (19), 
public  pension  expenditure  is  projected  to 
increase  to  10.9%  of  GDP  by  2070  (EU 
11.7%), one of the highest increases in the EU, 
due  to  fast  projected  ageing  alongside  a  lack 
of adjustment of the statutory retirement age 
in  line  with  projected  gains  in  life expectancy. 
Under the RRP, an action plan to enhance the 
adequacy  and  sustainability  of  the  pension 
system  is  expected  to  be  adopted  by  end 
2022.  This  follows  the  pension  review  that 
was  published  at  the  end  of  2020  and  which 
takes place every five years. 

is  also  expected  to 
expenditure 

Public  spending  in  health  and  long-term 
increase. 
care 
healthcare 
Government 
(excluding  outlays  on 
is 
relatively low at 5.4% of GDP (EU 6.6% of GDP 
in 2019). It is projected to surge by 2.6 pps of 

long-term  care) 

on 

(19)  European Commission, 2021 Ageing Report 

(https://ec.europa.eu/info/publications/2021-ageing-
report-economic-and-budgetary-projections-eu-
member-states-2019-2070_en) 

12 

0.5.10.15.20.25.30.35.2005200620072008200920102011201220132014201520162017201820192020% of populationMTChildren (<18y)Working age (18-64)Elderly (65+)Third country nationals (> 18y) 
  
                                                 
GDP between now and 2070 (20), overshooting 
the EU long-term average. Public expenditures 
on  long-term  care  are  expected  to  more  than 
double  from  1.1%  of  GDP  in  2019  to  3%  in 
2070  (see  Annex  14).  Apart  from  growing 
demand  and  ageing  developments,  increased 
health  expenditure  is  also  driven  by  a  high 
dependence 
expensive 
institutional  residential  care  services  (despite 
the increase recorded in recent years in home 
and day care services). 

the  more 

on 

Graph 3.2: Total outgoing dividend payments 
from EU Member States and share going to 
offshore financial centres 

Source: Eurostat 

taxes, 

implying 

Malta remains highly reliant on corporate 
greater 
income 
vulnerability  to  economic  shocks 
(see 
Annex  17).  In  2020,  the  share  of  corporate 
income  tax  in  total  tax  revenue  (15.6%) (21) 
remained  among  the  highest  in  the  EU.  This 
can  be  partly  explained  by 
international 
companies  being  attracted  by  Malta’s  refund 
tax system, which allows companies to reduce 
their effective tax rate from 35% (nominal tax 
rate)  to  between  0%  and  10%  through  tax 
credits  and  refunds (22).  In  October  2021, 
Malta  agreed  to  the  OECD  global  minimum 
corporate  tax  pact,  which  sets  the  minimum 
tax for large corporations at 15%. Discussions 
on  the  EU  directive  to  implement  the  OECD 
agreement  uniformly  across  the  EU  are 
ongoing. 

(20)  Source: 2021 Fiscal Sustainability Report  

(21)  Eurostat 

(22)  Deloitte, 2020 

13 

Malta’s corporate tax rules may facilitate 
aggressive  tax  planning.  Persistently  high 
inward  and  outward  foreign  direct  investment 
stock  (which  is  almost  exclusively  held  by 
special  purpose  entities)  coupled  with  a  high 
level  of  dividend  and  royalty  payments  as  a 
percentage  of  GDP  (see  Graph  3.2)  suggest 
that  companies  use  Malta’s  tax  rules  (i.e.  the 
taxes  or  other 
absence  of  withholding 
defensive  measures)  to  engage  in  aggressive 
tax planning.  

Malta  has  made  commitments  to  curb 
aggressive  tax  planning,  yet  significant 
shortfalls  remain.  Aside  from  implementing 
European and internationally agreed initiatives, 
Malta commits to tackling the issue in its RRP 
(see  Section  2).  Still,  the  RRP  reforms  do  not 
effectively address all the challenges posed by 
the current corporate tax system. The Maltese 
treatment 
non-domiciled 
resident 
companies  continues  to  provide  multinational 
firms  with  opportunities  of  double  non-
taxation  between  Malta  and  most  countries 
with which Malta has concluded a bilateral tax 
treaty and tax havens (23). The 2022 corporate 
tax  return  will  include  a  new  questionnaire  to 
collect  data  on  the  nature  and  scale  of  this 
issue. 

of 

Malta’s investor citizenship and residence 
schemes  have  a  potentially  high  risk  of 
being  misused.  The  OECD  has  noted  that 
these  schemes  facilitate  the  concealment  of 
the  real  jurisdictions  of  residence  (OECD, 
2019b).  When  used  as  tools  to  hide  assets 
held  abroad  from  reporting,  they  can  be  used 
to evade tax. Offshore wealth held by Maltese 
citizens is  estimated  to  have  reached  50%  of 
GDP  in  2018,  16  pps  more  than  the  2001-
2018 average. As a share of national GDP, this 

(23)  The ‘resident non-domiciled company’ structure is a tax 
arrangement where a firm is incorporated in a given 
country but effectively managed in Malta. Because of 
the residence tie-breaker rule in a number of bilateral 
tax treaties, the firm is considered to be tax resident in 
Malta, allowing Malta in principle to tax that firm’s 
worldwide profits. However, because the firm is 
incorporated abroad, Malta exercises this tax jurisdiction 
only in respect of profits realised in or remitted to 
Malta, whilst foreign profits that are not remitted to 
Malta (so-called “offshore income”) are not subject to 
tax in Malta, leading to a situation of double non-
taxation. 

0%5%10%15%20%25%0.020000.040000.060000.080000.0100000.0120000.0LUIEMTCYBGHUFRESDESLDKROEEFIBECZPTPLSIITHRLVLTOutgoing to RoWShare going to OFCs, rhs 
  
                                                 
                                                 
is the second highest in the EU (ECOPA, 2021). 
A  commitment  in  the  RRP  to  spontaneously 
exchange information on new applicants of the 
citizenship  scheme may  limit,  to  some extent, 
individuals. 
tax  evasion  by 
international 
However,  this  will  only  apply  to  future 
applicants and not to existing applicants, which 
limits  its  overall  effectiveness.  The  European 
Commission’s  infringement  procedure  against 
Malta’s investor citizenship scheme is ongoing. 
In  March  2022,  Malta  temporarily  suspended 
the  applications  of  Russian  and  Belarusian 
investor  citizenship  and 
nationals  for 
to 
residence 
recent 
developments  amid  Russia's 
invasion  of 
Ukraine. 

its 
schemes, 

due 

Improving 

R&I  activity  by  firms  remains  limited. 
Malta  ranked  24th  in  the  EU  by  business 
enterprise  spending  on  R&D  (BERD)  in  2020. 
Malta  has  several  schemes  supporting  start-
the 
ups  and  SMEs  growth. 
absorption  capacity  of  businesses  would 
require  re-assessing  existing  start-up  support 
schemes,  designing  a  clear  and  coordinated 
streamlining 
start-up 
regulations  and  improving  access  to  finance 
for  SMEs.  Malta’s  venture  capital  investments 
share  of  GDP  is  among  the  lowest  in  the  EU. 
Other  alternative  financing  channels  such  as 
business angels and crowdfunding also remain 
broadly unexploited. 

platform, 

further 

Improving productivity through R&I 

Malta’s 
innovation  performance  has 
improved  over  recent  years,  but  more 
efforts  are  needed.  The  improvement  was 
mainly  due  to  developments  in  the  area  of 
digitalisation  and  the  use  of 
information 
technologies (24).  However,  R&I  continues  to 
play  a  limited  role  in  Malta’s  economy.  With 
one  of  the  lowest  R&I  intensities  among 
Member  States  (R&D  expenditure  amounts  to 
0.67% of GDP in 2020 (see Annexes 1 and 9), 
ranking 26th in the EU), the country is still far 
from reaching its expenditure target of 2% of 
GDP.  The  RRP  includes  certain  measures  to 
investment.  However,  key 
encourage  R&I 
bottlenecks still need to be addressed for R&I 
to  play  a  bigger  role 
in  the  economic 
development  of  Malta  and,  among  other 
strengthen  Malta’s  position  on 
things, 
advanced  digital 
(such  as 
technologies 
artificial  intelligence,  blockchain,  internet  of 
things,  high  performance  computing),  in  line 
with  the  country’s  ambitions  and  strategies 
launched in recent years. Targeted efforts are 
also 
to  better  exploit  digital 
technologies  to  support  the  green  transition 
(e.g.  applications  for  energy  efficiency,  water 
management,  smart  mobility,  sustainable 
tourism).  

important 

(24)  European Innovation Scoreboard 2021. 

relations 

The  lack  of  skilled  talents  and  weak 
academia-business 
hamper 
business  innovation  in  Malta.  Malta  ranks 
26th among Member States in the number of 
new  graduates  in  science  and  engineering. 
Also,  the  share  of  ICT  graduates  has  been 
steadily  declining  in  Malta  –  from  10%  in 
2014 to 6% in 2019. There is an urgent need 
to  develop  an  effective  and  comprehensive 
system 
(from  school  up  to  the  highest 
university  level)  to  attract  and  retain  talented 
individuals  into  scientific  and  technological 
careers  and  support  the  development  of  their 
competences.  Moreover,  evidence  suggests 
that  Malta  is  performing  poorly  in  terms  of 
public-private cooperation in R&I, one indicator 
being that it ranks as one of the lowest in the 
EU 
in  public  R&I  financed  by  business. 
Ensuring  the  availability  of  skilled  talents  for 
R&I  and  the  development  of  opportunities  for 
public-private cooperation will require boosting 
the  capacities  and  performance  of  the  public 
in  particular  by  means  of 
science  base, 
resources  and  by  developing 
increased 
strategic partnerships. 

Maltese  SMEs  lag  behind  their  larger 
peers on  digitalisation.  Maltese  companies, 
including  SMEs,  record  a  high  level  of  digital 
intensity and have a relatively broad uptake of 
advanced digital technologies such as big data 
analytics,  artificial 
intelligence  and  cloud 
(see  Annex  8).  However,  a 
computing 
substantial 
large 
exists 
gap 
companies  and  SMEs.  For  example,  49%  of 
large companies in Malta have a high level of 
digital intensity, whereas for SMEs the share is 

between 

14 

 
                                                 
only  30%.  Although  the  RRP  supports  the 
digitalisation  of  companies,  notably  SMEs,  its 
contribution  alone  will  not  be  sufficient  to 
bridge the digital gap between small and large 
companies. Moreover, despite Malta’s ambition 
to  become  a  hub  for  emerging  technologies, 
efforts  are  still  needed  to  enable  the  full 
innovation potential of its businesses. 

15 

 
KEY FINDINGS 
KEY FINDINGS 

Malta’s  recovery  and  resilience  plan 
(RRP)  includes  measures  to  address  a 
series  of 
its  structural  challenges 
through: 

 

 

 

 

 

independence,  efficiency 
improving  the 
and  effectiveness  of  the  justice  system, 
and  improving  the  anti-corruption  and 
anti-money laundering frameworks. 

reducing  the  high  shares  of  early  school 
low-skilled  adults  and 
leavers  and 
labour  market 
increasing 
relevance  and 
the 
education system. 

inclusiveness  of 

the  quality, 

tackling the high gender employment gap.  

strengthening  the  digitalisation  of  the 
public sector. 

strengthening  the  resilience  of  the  health 
system.  

  alleviating  traffic  congestion,  improving 
transport  and 

the  quality  of  public 
enhancing soft mobility means. 

Beyond  the  reforms  and  investments  in 
the RRP, Malta would benefit from: 

 

 

 

 

 

strengthening  the  fiscal  sustainability  of 
the  pension,  health  and  long-term  care 
systems, while maintaining their adequacy.  

curbing remaining aggressive tax planning 
practices.  

reducing  greenhouse  gas  emissions, 
notably  from  transport  and  residential 
buildings,  and  increasing  the  share  of 
renewable energy.. 

creating  the  effective  conditions  to  meet 
landfill 
EU  municipal,  packaging  and 
targets on a sustainable basis.  

reinforcing 
notably as regards flooding risks.  

climate  adaptation,  most 

  boosting 

innovation,  by  strengthening 
public-private 
the 
conditions  for  attracting  and  retaining 
talent. 

cooperation 

and 

  ensuring  adequate  and  effective  social 
protection  for  disadvantaged  groups  and 
fostering social inclusion of children. 

16 

 
 
 
 
ANNEXES 

 
 
 
LIST OF ANNEXES 

Cross-cutting progress indicators 

Annex 1: Sustainable Development Goals 

Annex 2: Recovery and Resilience Plan – implementation 

Annex 3: Other EU instruments for recovery and growth 

Annex 4: Progress in the implementation of country-specific recommendations 

Environmental sustainability 

Annex 5: Green Deal 

Annex 6: Employment and social impact of the green transition 

Productivity 

Annex 7: Resource efficiency and productivity 

Annex 8: Digital transition 

Annex 9: Innovation 

Annex 10: Industry and single market 

Annex 11: Public administration 

Fairness 

Annex 12: Employment, skills and social policy challenges in light of the European Pillar of Social Rights 

Annex 13: Education and skills 

Annex 14: Health and health systems 

Annex 15: Economic and social performance at regional level 

Macroeconomic stability 

Annex 16: Key financial sector developments 

Annex 17: Taxation 

Annex 18: Key economic and financial indicators 

Annex 19: Debt sustainability analysis 

LIST OF TABLES 

Table A2.1: 
Table A4.1: 
Table A5.1: 
Table A7.1: 
Table A8.1: 
Table A9.1: 
Table A10.1: 

Key elements of the Maltese RRP 
Summary table on 2019,2020 and 2021 CSRs 
Indicators underpinning the progress on EU Green Deal from macroeconomic perspective 
Selected resource efficiency indicators 
Key Digital Economy and Society Index Indicators 
Key research, development and innovation indicators 
Key Single Market and Industry Indicators 

19 

21 

21 

23 

24 

26 

29 

29 

33 

35 

35 

36 

38 

40 

43 

45 

45 

47 

49 

51 

52 

52 

53 

55 

56 

23 
27 
32 
35 
36 
38 
41 

 
 
 
Table A11.1: 
Table A12.1: 
Table A13.1: 
Table A14.1: 
Table A15.1: 
Table A16.1: 
Table A17.1: 
Table A18.1: 
Table A19.1: 
Table A19.2: 

Public administration indicators – Malta 
Social Scoreboard for MALTA 
EU-level targets and other contextual indicators under the European Education Area strategic framework 
Key health indicators 
GDP growth in regions 
Financial soundness indicators 
Indicators on taxation 
Key economic and financial indicators 
Debt sustainability analysis for Malta 
Heat map of fiscal sustainability risks for Malta 

LIST OF GRAPHS 

Graph A1.1: 

Progress towards SDGs in Malta Progress in the last five years. 

Graph A2.1: 

Share of RRF funds contributing to each policy pillar 

Graph A3.1: 

ESIF 2014-2020 Total budget by fund (EUR billion, %) 

Graph A3.2: 

Cohesion policy contribution to the SDGs (EUR billion) 

Graph A4.1: 

Malta’s progress on the 2019-2020 CSRs (2022 European Semester cycle) 

Graph A5.1: 

Fiscal aspects of the green transition Taxation and government expenditure on environmental protection 

Graph A5.2: 

Thematic – Energy Share in energy mix (solids, oil, gas, nuclear, renewables 

Graph A5.3: 

Thematic – Biodiversity  Terrestrial protected areas and organic farming 

Graph A5.4: 

Thematic – Mobility  Share of zero emission vehicles (% of new registrations) 

Graph A6.1: 

Fair green transition challenges 

Graph A6.2: 

Energy poverty by income decile 

Graph A11.1: 

Open data maturity 

Graph A11.2: 

Performance on the single market public procurement indicator 

Graph A13.1: 

Low achievers in reading by student socio-economic status (ESCS), 2018 

Graph A14.1: 

Life expectancy at birth, years 

Graph A14.2: 

Projected increase in public expenditure on health care over 2019-2070 

Graph A15.1: 

Real GVA per worker 

Graph A17.1: 

Tax wedge indicators 

44 
45 
47 
49 
51 
52 
53 
55 
56 
57 

21 

23 

24 

25 

26 

29 

30 

30 

31 

33 

34 

43 

43 

48 

49 

50 

51 

54 

20 

 
 
 
 
ANNEX 1: SUSTAINABLE DEVELOPMENT GOALS 
CROSS-CUTTING PROGRESS INDICATORS 
ANNEX 1: SUSTAINABLE DEVELOPMENT GOALS 

of 

four 

dimensions 

This annex assesses Malta’s progress on the 
Sustainable Development Goals (SDGs) along 
the 
competitive 
sustainability.  The  17  SDGs  and  their  related 
indicators  provide  a  policy  framework  under  the 
UN’s  2030  Agenda  for  Sustainable  Development. 
The  aim  is  to  end  all  forms  of  poverty,  fight 
inequalities  and  tackle  climate  change,  while 
ensuring that no one is left behind. The EU and its 
Member  States  are  committed  to  this  historic 
global  framework  agreement  and  to  playing  an 
active  role  in  maximising  progress  on  the  SDGs. 
Graph  A1.1  is  based  on  the  EU  SDG  indicator  set 
developed  to  monitor  progress  on  SDGs  in  an  EU 
context. 

While Malta performs very well (SDG 7) or is 
improving  (SDG 2,  9,  12,  13) on  several  SDG 
environmental 
indicators 
sustainability,  it  still  needs  to  catch  up  on 
SDG  11.  Although  Malta’s  overall  energy 
consumption is below the EU average, the share of 

relating 

to 

far below the EU average (10.5% vs EU 47.8% in 
2020).  Various  measures  in  the  recovery  and 
resilience  plan  (RRP),  such  as  energy-efficiency 
renovations  of  private  and  public  buildings, 
renewable energy investments in roads and public 
spaces, measures to promote sustainable mobility, 
and  a  waste  collection  system  reform,  aim  to 
contribute  to  better  energy  efficiency,  clean 
energy,  sustainable  transport,  and  a  circular 
economy. 

Malta  performs  very  well  (SDG  1,  3,  8),  well 
(SDG 10) or is improving (SDG 2, 4, 5) on SDG 
indicators  assessing  the  fairness  of  society 
and economy. (25) On ‘Quality education’ (SDG 4), 
although  still  higher  than  the  EU  average  (9.7%), 
Malta  has  significantly  decreased  the  share  of 
early  leavers  from  education  and  training  from 
15.6%  (2016)  to  11%  in  2021  and  has  steadily 
increased  the  tertiary  education  rate  from  34.3% 
in  2016  to  42.4%  in  2021  (vs  EU  41.2%). 
However,  there  is  still  room  for  improvement  in 
enhancing  basic  skills  levels  (35.9%  of  low-

Graph A1.1: Progress towards SDGs in Malta Progress in the last five years. 

For detailed datasets on the various SDGs see the annual ESTAT report ‘Sustainable development in the European Union’, 
https://ec.europa.eu/eurostat/web/products-statistical-books/-/KS-03-21-096.  Extensive country specific data on the short-term 
progress of Member States can be found here: Key findings - Sustainable development indicators - Eurostat (europa.eu) 
Source: Eurostat, latest update of 28 April 2022. Data mainly refer to 2015-2020 and 2016-2021. 
renewable 
energy 
consumption  was  10.7%  in  2020,  which  is  less 
than  half  of  the  EU  average  in  2020  (22.1%). 
Further,  the  recycling  rate  of  municipal  waste  is 

challenges in light of the European Pillar of Social Rights’ for 
further information. 

(25)  See Annex 12 – ‘Employment, skills and social policy 

in  gross 

energy 

final 

21 

 
 
                                                 
 
 
 
achieving  15-year-olds  in  reading  literacy  vs  EU 
22.5%  in  the  OECD  Programme  for  International 
Student  Assessment  (PISA)  2018).  Further,  the 
gender  employment  gap  is  particularly  high  in 
Malta (16.8 pps vs EU 10.8 pps in 2021). Reforms 
and  investments  under  Component  5  of  the 
Maltese  RRP  contribute  to  strengthening  early 
school  leaving  prevention  measures  and  high-
quality 
expanding 
opportunities  for  upskilling  and  reskilling  for  all 
adults, and in particular for the low-skilled, as well 
as promoting female labour market participation. 

education, 

inclusive 

Malta  performs  very  well  (SDG  8)  or  is 
improving  (SDG  4,  9)  on  SDG  indicators 
related  to  productivity.  With  a  61%  share  of 
adults  (aged  16  to  74)  with  at  least  basic  digital 
skills  in  2021,  Malta’s  performance  is  above  the 
EU  average  (54%).  Malta  performs  very  well  on 
‘Decent work and economic growth’ (SDG 8) and is 
making  progress  in  ‘Industry,  innovation,  and 
infrastructure’ (SDG 9). However, with only 0.67% 
of  GDP  spent  on  R&D  in  2020,  Malta  has  one  of 
the lowest R&D expenditures in the EU. In addition, 
the  share  of  R&D  staff  in  the  active  population 
(0.68%)  remains  far  below  the  EU  average  in 
targets  bottlenecks 
2020 
especially  regarding  digitalisation  to 
improve 
progress on these SDGs.  

(1.44%).  The  RRP 

Malta  performs  very  well  on  SDG  indicators 
related  to  macroeconomic  stability  (SDG  8, 
16). Malta further increased the employment rate 
from  71.1%  in  2016  to  78.6%  in  2021,  which  is 
very high in comparison to the EU average (73.1% 
in  2021).  Malta  improved  scores  on  indicators 
measuring  ‘Peace,  justice,  and  strong  institutions’ 
(SDG  16).  The  RRP  includes  reforms  to  address 
several  long-standing  institutional  challenges  in 
the  areas  of  justice  as  well  as  the  fight  against 
corruption and money laundering. 

22 

 
 
ANNEX 2: RECOVERY AND RESILIENCE PLAN – IMPLEMENTATION 
ANNEX 2: RECOVERY AND RESILIENCE PLAN – IMPLEMENTATION 

its 

The  Recovery  and  Resilience  Facility  (RRF)  is 
the  centrepiece  of  the  EU’s  efforts  to 
support  its  recovery  from  the  COVID-19 
pandemic,  fast  forward  the  twin  transition 
and  strengthen  resilience  against  future 
shocks.  Malta  submitted 
recovery  and 
resilience  plan  (RRP)  on  13  July  2021.  The 
Commission’s 
on  16 
September  2021  and  Council’s  approval  on  5 
October  2021  paved  the  way  for  disbursing  EUR 
316  million  in  grants  under  the  Recovery  and 
Resilience  Facility  over  2021-2026.  The  financing 
agreement was signed on 10 December 2021. The 
key  elements  of  the  Malta’s  RRP  are  set  out  in 
Table  A2.1.  The  share  of  funds  contributing  to 
each  of  the  RRF’s  six  policy  pillars  is  outlined  in 
Graph A2.1 below. 

assessment 

positive 

Table A2.1: Key elements of the Maltese RRP 

(1)See Pfeiffer P., Varga J. and in ’t Veld J. (2021), 
‘Quantifying Spillovers of NGEU investment’, European 
Economy Discussion Papers, No. 144 and Afman et al. (2021), 
‘An overview of the economics of the Recovery and Resilience 
Facility’, Quarterly Report on the euro area (QREA), Vol. 20, No. 
3 pp. 7-16. 
Source: European Commission 2022 

Graph A2.1: Share of RRF funds contributing to each policy pillar 

Graph note: Each measure contributes towards two policy areas of the six pillars, therefore the total contribution to all pillars 
displayed on this chart amounts to 200% to 200% of the estimated cost of the Maltese RRP. The bottom part represents the 
amount of the primary pillar, the top part the amount of the secondary pillar. 
https://ec.europa.eu/economy_finance/recovery-and-resilience-scoreboard/country_overview.html 
Source: RRF Scoreboard https://ec.europa.eu/economy_finance/recovery-and-resilience-scoreboard/country_overview.html 

23 

Total allocation EUR 316,4 million in grants (2,3% or 2019 GDP)Investments and Reforms 17 investments and 30 reformsTotal number of Milestones and Targets138Estimated macroeconomic impact (1) Raise GDP by 0.7%-1.1% by 2026 (0.4% in spillover effects)Pre-financing disbursed EUR 41.1 million (December 2021)First instalment Malta did not yet submit a first payment request0%10%20%30%40%50%60%Green transitionDigitaltransformationSmart,sustainable andinclusive growthSocial andterritorialcohesionHealth, andeconomic,social andinstitutionalresiliencePolicies for thenext generation 
 
 
 
  
 
 
 
  
ANNEX 3: OTHER EU INSTRUMENTS FOR RECOVERY AND GROWTH 
ANNEX 3: OTHER EU INSTRUMENTS FOR RECOVERY AND GROWTH 

The EU’s budget of more than EUR 1.2 trillion 
for  2021-2027  is  the  investment  lever  to 
help  implement  EU  priorities.  Underpinned  by 
additional  amount  of  about  EUR  800  billion 
largest 
through  NextGenerationEU  and 
instrument, the Recovery and Resilience Facility, it 
represents  a  significant  firepower  to  support  the 
recovery and sustainable growth. 

its 

Graph A3.1: ESIF 2014-2020 Total budget by fund 
(EUR billion, %) 

Note: bln EUR in current prices, % of total  
Source: European Commission, Cohesion Open Data  

funds 

support 

partnership 

In  2021-2027,  EU  cohesion  policy  funds (26) 
development 
long-term 
will 
objectives  in  Malta  by  investing  EUR  0.86 
billion (27)  including  EUR  23.3  million  from  the 
Just  Transition  Fund (28)  to  alleviate  the  socio-
economic  impacts  of  the  green  transition  in  the 
most vulnerable regions. The 2021-2027 cohesion 
policy 
and 
programmes  take  into  account  the  2019-2020 
country-specific recommendations (see also Annex 
4)  and  investment  guidance  provided  as  part  of 
the  European  Semester,  ensuring  synergies  and 
complementarities  with  other  EU  funding. 
In 
addition,  Malta  will  benefit  from  EUR  0.1  billion 
support for the 2023-27 period from the Common 
Agricultural  Policy (29),  which  supports  social, 
environmental,  and  economic  sustainability  and 
rural  areas, 
innovation 

in  agriculture  and 

agreements 

(26)  European Regional Development Fund (ERDF), European 

Social Fund+ (ESF+), Cohesion Fund (CF), Just Transition Fund 
(JTF), Interreg. 

(27)  Current prices, source: Cohesion Open Data  

(28)  For more information, see https://ec.europa.eu/info/funding-

tenders/find-funding/eu-funding-programmes/just-transition-
fund_en 

(29)  For more information, see https://ec.europa.eu/info/food-
farming-fisheries/key-policies/common-agricultural-
policy/new-cap-2023-27_en 

24 

contributing  to  the  European  Green  Deal (30),  and 
ensuring long-term food security.  

total 

investment 

In  2014-2020,  the  European  Structural  and 
Investment Funds (ESIF) for Malta are set to 
invest  EUR  0.99  billion (31)  from  the  EU 
budget.  The 
including 
national  financing  amounts  to  EUR  1.20 
billion (Graph A3.1), representing around 1.54% 
of  GDP  for  2014-2020  and  29.97%  of  public 
investment (32). By 31 December 2021, 95% of the 
total  was  allocated  to  specific  projects  and  54% 
was reported as spent, leaving EUR 0.55 billion to 
be  spent  by  the  end  of  2023 (33).  Among  the  11 
objectives  the  most  relevant  ones  for  cohesion 
policy funding in Malta are environment protection 
and resource efficiency, network infrastructure and 
transport,  social  inclusion  and  protection  of  the 
environment. By the end of 2020, cohesion policy 
investments supported the reduction of more than 
20  000  tonnes  of  CO2  emissions,  the  supply  of 
water  to  an  additional  32  000  people,  the 
production  of  22  MW  of  renewable  energy  and 
improved  health  services  to  460  000  citizens.  In 
in  a 
addition,  39 000  persons  participated 
European  Social  Fund  financed  project,  of  which 
more  than  8 400  gained  a  qualification  and 
almost  5 000  found  a  job  or  engaged  in  job 
searching. 

Cohesion  policy  funds  already  substantially 
contribute  to  the  Sustainable  Development 
Goals (SDGs) objectives. In Malta, cohesion policy 
funds support 9 of the 17 SDGs with up to 94% of 
the  expenditure  contributing  to  achieving  the 
goals.  

(30)  For more information, see 

https://ec.europa.eu/info/strategy/priorities-2019-
2024/european-green-deal_en 

(31)  ESIF includes cohesion policy funds (ERDF, ESF+, CF, Interreg) 

the European Agricultural Fund for Rural Development 
(EAFRD) and the European Maritime and Fisheries Fund 
(EMFF). According to the ‘N+3 rule’, the funds committed for 
2014-2020 must be spent by 2023 at the latest (by 2025 
for EAFRD). Data source: Cohesion Open Data, cut-off date 
31.12.2021 for ERDF, ESF+, CF, Interreg; cut-off date 
31.12.2020 for EAFRD and EMFF.  

(32)  Public investment is gross fixed capital formation plus 

capital transfers, general government. 

(33)  Including REACT-EU. ESIF data on 

https://cohesiondata.ec.europa.eu/countries/MT 

0.2420%0.2016%0.033%0.4538%0.2823%CFEAFRDEMFFERDFESF 
 
  
                                                 
                                                 
 
Graph A3.2: Cohesion policy contribution to the 
SDGs (EUR billion) 

Source: European Commission, DG REGIO 

REACT-EU 

instrument 

The 
(Recovery 
Assistance  for  Cohesion  and  the  Territories 
of Europe) under NextGenerationEU provided 
EUR 111.2  million  of  additional  funding  to 
2014-2020  cohesion  policy  allocations  for 
Malta (34)  to  ensure  a  balanced  recovery,  boost 
convergence  and  provide  vital  support  to  regions 
following the coronavirus outbreak. The REACT-EU 
2021 tranche provided a contribution to the short-
time work schemes in Malta. The 2022 tranche will 
the  purchase  of  high-tech  medical 
support 
equipment. 

The  Coronavirus  Response 
Investment 
Initiative (35) provided the first EU emergency 
support  for  Malta  to  address  the  COVID-19 
pandemic.  It  introduced  extraordinary  flexibility, 
for 
enabling  Malta 
immediate public health needs (EUR 15 million for 
purchasing  vaccines  and  healthcare  equipment) 
and  for  businesses  (EUR  35  million  for  working 
for  SMEs  and  employment  support 
capital 
measures). 

reallocate 

resources 

to 

for 

temporary 

unemployment 
to 

Malta  received  support  under  the  European 
to 
instrument 
support 
in 
mitigate 
an 
emergency 
similar 
measures to short-time work schemes and as 
an  ancillary,  health-related  measures. The 
Council granted financial assistance under SURE to 
Malta  in  September  2020  and  top-up  support  in 

risks 
finance 

(SURE) 

(34)  For more information, see 

https://cohesiondata.ec.europa.eu/stories/s/REACT-EU-
Fostering-crisis-repair-and-resilience/26d9-dqzy/ 

(35)  Re-allocating ESIF resources according to Regulation (EU) 

April 2021 for a maximum of EUR 420 million (36), 
which  was  disbursed  by  25  May  2021.  SURE  is 
estimated  to  have  supported  approximately  35% 
of  workers  and  30%  of  firms  for  at  least  one 
month in 2020 and 35 % of workers and 25% of 
firms  in  2021,  primarily  in  accommodation  and 
food  services,  wholesale  and  retail  trade,  and 
administrative services. Malta is estimated to have 
saved  a  total  of  EUR  0.04  billion  on  interest 
payments  as  a  result  of  SURE’s  lower  interest 
rates (37).  

Since  2017,  Malta  has  received  assistance 
through  46 
technical  support  projects. 
Projects  delivered  in  2021  aimed  for  example  to 
design  a  sustainable  development  strategy  and 
action  plan  and  improve  the  inclusion  of  migrant 
learners 
in  education.  The  Commission  also 
assisted  Malta  in  implementing  specific  reforms 
and  investments  in  the  RRP,  for  instance  on 
coastal  protection  and  digitalisation  of  Malta’s 
maritime administration. In 2022, new projects will 
start  to  support,  amongst  others,  the  renovation 
wave of public buildings through the development 
of  energy  performance  upgrades,  guidelines, 
methodologies and capacity building. 

include 

Malta  also  benefits 
from  other  EU 
the  Connecting 
programmes.  These 
Europe  Facility (38),  which  allocated  EU  funding  of 
EUR  71.1  million  to  specific  projects  on  strategic 
transport  networks,  and  Horizon  2020 (39),  which 
allocated EU funding of EUR 37.2 million. 

(36)  Source: https://ec.europa.eu/info/business-economy-

euro/economic-and-fiscal-policy-coordination/financial-
assistance-eu/funding-mechanisms-and-facilities/sure_en 

(37)  For more information, see https://ec.europa.eu/info/funding-
tenders/find-funding/eu-funding-programmes/technical-
support-instrument/technical-support-instrument-
tsi_en#:~:text=The%20Technical%20Support%20Instrument
%20(TSI,co%2Dfinancing%20from%20Member%20States. 

(38)  For more information,  see 

https://ec.europa.eu/inea/en/connecting-europe-facility 

2020/460 of the European Parliament and of the Council of 
30 March 2020, and Regulation (EU) 2020/558 of the 
European Parliament and of the Council of 23 April 2020. 

(39)  For more information, see https://ec.europa.eu/info/research-
and-innovation/funding/funding-opportunities/funding-
programmes-and-open-calls/horizon-2020_en 

25 

0.000.000.030.030.060.060.080.110.170.240.00.10.10.20.20.30.3SDG 13 Climate actionSDG 15 Life on landSDG 12 Responsible consumption and productionSDG 7 Affordable and clean energySDG 1 No povertySDG 3 Good health and well beingSDG 4 Quality educationSDG 6 Clean water and sanitationSDG 8 Decent work and economic growthSDG 9 Industry, innovation, infrastructure 
  
                                                 
                                                 
ANNEX 4: PROGRESS IN THE IMPLEMENTATION OF COUNTRY-SPECIFIC 
ANNEX 4: PROGRESS IN THE IMPLEMENTATION OF COUNTRY-SPECIFIC 
RECOMMENDATIONS 
RECOMMENDATIONS 

Graph A4.1: Malta’s progress on the 2019-2020 
CSRs (2022 European Semester cycle) 

The  Commission  assessed  the  2019-2021 
country-specific  recommendations  (CSRs) (40) 
addressed  to  Malta  in  the  context  of  the 
European  Semester.  The  assessment  takes  into 
account  the  policy  action  taken  by  Malta  to 
date (41),  as  well  as  the  commitments  in  the 
recovery and resilience plan (RRP) (42). At this early 
stage  of  the  RRP  implementation,  overall  74%  of 
the CSRs focusing on structural issues in 2019 and 
2020  have  recorded  at  least  “some  progress”, 
while  26%  recorded  “limited”  (see  Graph  A4.1). 
Considerable  additional  progress  in  addressing 
structural  CSRs  is  expected  in  the  years  to  come 
with the further implementation of the RRP. 

Source: European Commission 

(40)  2021 CSRs: https://eur-lex.europa.eu/legal-

content/EN/TXT/?uri=CELEX%3A32021H0729%2818%29&qi
d=1627675454457  
2020 CSRs: https://eur-
lex.europa.eu/search.html?textScope0=ti&lang=en&scope=E
URLEX&qid=1526385017799&type=quick&AU_CODED=CO
NSIL&DD_YEAR=2020&andText0=recommendation&DD_M
ONTH=07 
2019 CSRs: https://eur-
lex.europa.eu/search.html?textScope0=ti&lang=en&scope=E
URLEX&qid=1526385017799&type=quick&AU_CODED=CO
NSIL&DD_YEAR=2019&andText0=recommendation&DD_M
ONTH=07 

(41)  ) 

Incl. policy action reported in the National Reform 

Programme, as well as in the RRF reporting (bi-annual 
reporting on the progress with implementation of milestones 
and targets and resulting from the payment request 
assessment). 

(42)  ) 

Member States were asked to effectively address all 

or a significant subset of the relevant country-specific 
recommendations issued by the Council in 2019 and 2020 in 
their RRPs. The CSR assessment presented here takes into 
account the degree of implementation of the measures 
included in the RRP and of those done outside of the RRP at 
the time of assessment. Measures foreseen in the annex of 
the adopted Council Implementing Decision on the approval 
of the assessment of the RRP which are not yet adopted nor 
implemented but considered as credibly announced, in line 
with the CSR assessment methodology, warrant “limited 
progress”. Once implemented, these measures can lead to 
“some/substantial progress” or “full implementation”, 
depending on their relevance. 

26 

Limited Progress26%Some Progress57%Substantial Progress17% 
 
                                                 
 
       
 
 
 
Table A4.1: Summary table on 2019,2020 and 2021 CSRs 

(Continued on the next page) 

27 

MaltaAssessment in May 2022*RRP coverage of CSRs until 20262019 CSR1Limited progressEnsure the fiscal sustainability of the healthcare and pension systems, including by restricting early retirement and adjusting the statutory retirement age in view of expected gains in life expectancy.Limited ProgressRelevant RRP measures planned as of 2022 to 2025. 2019 CSR 2Some ProgressAddress features of the tax system that may facilitate aggressive tax planning by individuals and multinationals, in particular by means of outbound payments. Limited ProgressRelevant RRP measures planned as of 2022 to 2024. Strengthen the overall governance framework, including by continuing efforts to detect and prosecute corruption. Some ProgressRelevant RRP measures planned as of 2020 to 2026.Continue the ongoing progress made on strengthening the anti-money-laundering framework, in particular with regard to enforcements. Substantial ProgressRelevant RRP measures planned as of 2022 to 2023.Strengthen the independence of the judiciary, in particular the safeguards for judicial appointments and dismissals, and establish a separate prosecution service.Some ProgressRelevant RRP measures planned as of 2021 to 2026.2019 CSR 3Some ProgressFocus investment-related economic policy on research and innovation, Some ProgressRelevant RRP measures planned as of 2022 to 2026. natural resources management, Some ProgressRelevant RRP measures planned as of 2021 to 2025.resource and energy efficiency, Some ProgressRelevant RRP measures planned as of 2021 to 2026.sustainable transport, reducing traffic congestion and Some ProgressRelevant RRP measures planned as of 2021 to 2025.inclusive education and training.Some ProgressRelevant RRP measures planned as of 2021 to 2025.2020 CSR1Substantial ProgressTakeallnecessarymeasures,inlinewiththegeneralescapeclauseoftheStabilityandGrowthPact,toeffectivelyaddresstheCOVID-19pandemic,sustaintheeconomyandsupporttheensuingrecovery.Wheneconomicconditionsallow,pursuefiscalpoliciesaimedatachievingprudentmedium-termfiscalpositionsandensuring debt sustainability, while enhancing investment. CSR no longer relevantNot applicableStrengthentheresilienceofthehealthsystemwithregardtothehealth workforce, critical medical products and primary care.Some ProgressRelevant RRP measures planned as of 2021 to 2026. 2020 CSR2Limited ProgressConsolidate short-time work arrangements and ensure the adequacy of unemployment protection for all workers. Limited ProgressRelevant RRP measures planned as of 2022. Strengthen the quality and inclusiveness of education and skills development.Limited ProgressRelevant RRP measures planned as of 2021 to 2025. 
 
 
 
  
 
Table (continued) 

* See footnote 42. 

Source: European Commission 

28 

2020 CSR 3Some ProgressEnsure effective implementation of liquidity support to affected businesses, including the self-employed. Substantial ProgressRelevant RRP measures planned as of 2021 to 2026.Front-load mature public investment projects Substantial ProgressRelevant RRP measures planned as of 2021 to 2026. and promote private investment to foster the economic recovery.Some ProgressRelevant RRP measures planned as of 2021 to 2026.Focusinvestmentonthegreenanddigitaltransition,inparticularonclean and efficient production and use of energy, Some ProgressRelevant RRP measures planned as of 2021 to 2026. sustainable transport, Some ProgressRelevant RRP measures planned as of 2021 to 2025.waste management,Some ProgressRelevant RRP measures planned as of 2021 to 2025.research and innovation.Limited ProgressRelevant RRP measures planned as of 2022 to 2026. aswellasreinforceddigitalinfrastructuretoensuretheprovisionofessential services.Some progressRelevant RRP measures planned as of 2021 to 2026. 2020 CSR 4Some ProgressCompletereformsaddressingcurrentshortcomingsininstitutionalcapacity and governance to enhance judicial independence. Some ProgressRelevant RRP measures planned as of 2020 to 2026.Continueeffortstoadequatelyassessandmitigatemoney-launderingrisksandtoensureeffectiveenforcementoftheanti-money-laundering framework. Substantial ProgressRelevant RRP measures planned as of 2022 to 2023.Step up action to address features of the tax system that facilitate Limited ProgressRelevant RRP measures planned as of 2022 2021 CSR1Some ProgressIn2022,maintainasupportivefiscalstance,includingtheimpulseprovidedbytheRecoveryandResilienceFacility,andpreservenationally financed investment.Some ProgressNot applicableWheneconomicconditionsallow,pursueafiscalpolicyaimedatachievingprudentmedium-termfiscalpositionsandensuringfiscalsustainability in the medium term.Some ProgressNot applicable At the same time, enhance investment to boost growth potential.Payparticularattentiontothecompositionofpublicfinances,onboththerevenueandexpendituresidesofthenationalbudget,andtothequalityofbudgetarymeasuresinordertoensureasustainableandinclusiverecovery.Prioritisesustainableandgrowth-enhancinginvestment,inparticularinvestmentsupportingthegreenanddigitaltransition.Some ProgressNot applicableGiveprioritytofiscalstructuralreformsthatwillhelpprovidefinancingforpublicpolicyprioritiesandcontributetothelong-termsustainabilityofpublicfinances,including,whererelevant,bystrengtheningthecoverage,adequacyandsustainabilityofhealthand social protection systems for all.Limited ProgressNot applicable 
 
 
 
  
 
 
ENVIRONMENTAL SUSTAINABILITY 
ENVIRONMENTAL SUSTAINABILITY 
ANNEX 5: GREEN DEAL 
ANNEX 5: GREEN DEAL 

intends 

The  European  Green  Deal 
to 
transform the  EU  into a  fair and prosperous 
society,  with  a  modern,  resource-efficient 
and competitive economy where there are no 
net  emissions  of  greenhouse  gases  in  2050 
and  where  economic  growth  is  decoupled 
from resource use. This annex offers a snapshot 
of  the  most  significant  and  economically  relevant 
developments  in  Malta  in  the  respective  building 
blocks  of 
is 
complemented by Annex 6 on the employment and 
social impact of the green transition and Annex 7 
for circular economy aspects of the Green Deal. 

the  European  Green  Deal. 

It 

Graph A5.1: Fiscal aspects of the green transition 
Taxation and government expenditure on 
environmental protection 

Source: Eurostat 

Malta  has  the  highest  relative  gap  of  any 
Member  State  to  its  2030  GHG  reduction 
target  under 
the  EU  Effort  Sharing 
Regulation (ESR) (43). The greenhouse gas (GHG) 
intensity  of  the  Maltese  economy 
emissions 
decreased  between  2015  and  2020  (in  terms  of 
gross value added) and stands at 30%, below the 
EU  average.  The  average  carbon  footprint  per 
worker at 7.18 tons of GHG emissions is relatively 
low (13.61 in the EU). By 2020, Malta’s total GHG 
emissions  (excluding  land  use,  land-use  change 
and  forestry  (LULUCF), 
international 
aviation)  had  decreased  significantly  by  about 
19%  compared  to  1990.  Malta  intends  to  use 
flexibilities  of  the  EU  Effort  Sharing  Decision 
(ESD) (44)  to  meet  its  2020  target  for  sectors 

including 

(43)  Regulation (EU) 2018/ of the European Parliament and of the 
Council of 30 May 2018 on binding annual greenhouse gas 
emission reductions by Member States from 2021 to 2030 
contributing to climate action to meet commitments under 
the Paris Agreement and amending Regulation (EU) No 
525/2013 (europa.eu) 

(44)  Decision No 406/2009/EC of the European Parliament and of 
the Council of 23 April 2009 on the effort of Member States 

covered  by  the  ESD,  such  as  buildings,  road 
transport, agriculture, small industry and waste. In 
particular,  emissions  from  road  transport  have 
increased  significantly  since  1990.  While  Malta’s 
national  energy  and  climate  plan  (NECP)  sets  out 
measures to mitigate GHG emissions and adapt to 
a  changing  climate,  it  falls  short  of  achieving 
Malta’s ESR target for 2030. Malta has by far the 
highest expected relative distance of any Member 
State  to  its  2030  ESR  target.  In  its  recovery  and 
resilience  plan  (RRP),  Malta  allocates  53.8%  of 
available  funds  (around  EUR  170  million)  to 
climate and environmental objectives and outlines 
crucial  reforms  and  investments  to  further  the 
green transition. Additional measures are included 
in  the  Low  Carbon  Development  Strategy  which 
will  further  address  the  attainment  of  the  2030 
climate target and pave the way to the transition 
to a low carbon economy. While these reforms and 
investments  are  welcome,  they  will  need  to  be 
complemented  by  additional  measures  for  Malta 
to meet its climate objectives.  

taxation 

environmental 

Malta’s  fiscal  indicators  show  that  revenue 
from 
and 
government  expenditure  on  environmental 
protection  are  higher  than  the  EU  average, 
with  the  latter  being  significantly  higher. 
Malta’s  revenues  from  total  environmental  taxes 
decreased  from  2.70%  of  GDP  in  2015  to  2.46% 
in  2019,  and  further  to  2.27%  in  2020,  still 
remaining  slightly  higher  than  the  EU  average  of 
2.24% Excise duties on fuel, which usually provide 
the  bulk  of  revenue  from  taxes  on  energy,  are 
moderate.  The  Maltese  government  spends  a 
higher  share  of  its  expenditure  on  environmental 
protection than in the EU overall (see Figure 1). All 
three indicators have decreased since 2015, while 
fossil fuel subsidies have been stable across time. 
For more indicators on taxation, see Annex 17. 

to reduce their greenhouse gas emissions to meet the 
Community’s greenhouse gas emission reduction 
commitments up to 2020 (europa.eu)  

29 

0.02.04.06.08.010.0Environmental taxes (%of GDP)Environmental taxes (%of total taxation)Government expenditureon environmentalprotection (% of totalexpenditure)MT (2020)EU27 (2020) 
 
 
   
                                                 
                                                                              
 
 
Graph A5.2: Thematic – Energy 
Share in energy mix (solids, oil, gas, nuclear, 
renewables 

(1) The energy mix is based on gross inland consumption, and 
excludes heat and electricity. The share of renewables 
includes biofuels and non-renewable waste. 
Source: Eurostat.  

Malta  has  one  of  the  lowest  shares  of 
renewables  in  energy  consumption  in  the  EU 
with  renewable  energy  sources  representing 
8%  of  the  gross  inland  consumption  of 
energy. While coal is absent from the energy mix, 
Malta is currently heavily reliant on non-renewable 
energy  sources  (92%  of  its  gross  inland  energy 
consumption  in  2020,  with  oil  reaching  a  48% 
share and natural gas a 44% share). Malta slightly 
overachieved its 2020 renewable energy target of 
10% in gross final energy consumption. Moreover, 
Malta  has  no  wind  electricity  generation  capacity 
installed  and  plans  a  weak  contribution  to  the 
2030  EU  renewables  target  of  11.5%.  Neither 
onshore  nor  offshore  wind  energy  projects  are 
planned  in  Malta’s  national  energy  and  climate 
plan.  Further  opportunities  in  renewable-energy 
the 
investments  should  be  explored  under 
Innovation Fund and the cohesion policy funds.  

the  2020 

Following  years  of  steady  increase  Malta’s 
final  energy  consumption  declined  in  2020, 
also thanks to the COVID-19 crisis, helping it 
targets  for  energy 
achieve 
is 
consumption 
efficiency,  but  energy 
expected  to  increase  again  post-pandemic 
and  the  ambition  set  in  Malta’s  national 
energy  and  climate  plan  (NECP)  for  2030 
remains  very  low.  Malta’s  energy  intensity  is 
very  high,  with  281  Kg  of  oil  equivalent  per 
thousand  euro  of  GDP  compared  to  the  EU 
average of 117 Kg of oil equivalent per thousand 
euro  of  GDP  in  2020.    The  residential  building 
sector  saw  the  sharpest  increase  in  final  energy 
consumption  since  2016.  Malta’s  RRP  does  not 
support  the  renovation  of  existing  residential 

building  stock,  which  could  benefit  from  energy 
efficiency  renovations  to  ensure  energy  savings 
particularly in  the  hot  summer months.  The  NECP 
sets  Malta’s  national  contribution  to  energy 
efficiency  at  a  primary  energy  intensity  level  of 
0.07  toe/EUR  in  2030,  which  translates  into  1.1 
Mtoe  for  primary  energy  and  0.8  Mtoe  for  final 
energy  consumption 
indicators,  an 
increase  from  the  2020  targets  of  0.8  Mtoe  and 
0.6 Mtoe respectively). According to its NECP, and 
compared  to  its  average  consumption  of  2017-
2019,  Malta  targets  to  consume  +19.0%  more 
final  and  +25.9%  more  primary  energy  by  2030 
while  the  respective  average  EU  targets  are  -
12.6% and -17.6%.  

(for  both 

and 

strengthening 

In  terms  of  biodiversity,  the  protection  of 
habitats  and  species  by  fully  implementing 
Natura  2000 
the 
enforcement  of  nature  directives  has  long 
remained a challenge in Malta. Malta has now 
designated 27 special areas of conservation (SAC) 
and  has  adopted  conservation  orders  for  eight  of 
them,  along  with  20  management  plans  for 
another  19  sites.  For  five  Sites  of  Community 
Interest  (SCIs),  all  marine,  the  SAC  designation  is 
delayed. While the establishment of the terrestrial 
Natura  2000  network  is  now  completed,  offshore 
marine  sites  have  still  to  be  designated  for 
submerged  or  partially  submerged  caves  and 
reefs. The hunting and trapping practices in Malta 
continue  to  be  subject  to  several  infringement 
proceedings,  with  some  having  led  to  rulings  by 
the Court of Justice.  

Graph A5.3: Thematic – Biodiversity  
Terrestrial protected areas and organic farming 

(1) For terrestrial protected areas data for 2018, and data for 
the EU average (2016, 2017) is lacking. 
Source: EEA (terrestrial protected areas) and Eurostat 
(organic farming). 

In  terms  of  mobility,  Malta’s  dependence  on 
road  mobility  together  with  an  inefficient 
road  network  and  an  established  preference 
in 
for  private  transport  have  resulted 

30 

020406080100200520102015201820192020MTSolid fossil fuels, peat and oil shaleOilGasNuclearRenewables0102030402016201720192020MTTerrestrial protected areas (% total area)Area under organic farming (% total utilised agricultural area)EU27 (terrestrial)EU27 (organic) 
   
   
Graph A5.4: Thematic – Mobility  
Share of zero emission vehicles (% of new 
registrations) 

(1) Zero emission vehicles (passenger cars) include battery 
and fuel cell electric vehicles (BEV, FCEV). 
Source: European Alternative Fuels Observatory.  

significant  road  congestion  problems,  noise, 
increased  greenhouse 
air  pollutants  and 
emissions. The external costs of transport such as 
air  pollution,  noise  and  congestion  from  roads  in 
Malta  amount  to  EUR  400  million  annually, 
corresponding to 3.6% of Malta’s GDP (45), and are 
on the rise. Malta performs below the EU average 
in  terms  of increasing  the  share  of  zero-emission 
vehicles  in  its  passenger  car  fleet.  Whilst  Malta’s 
RRP  plan  does  allocate  EUR  50.3  million  to  a 
number of grant schemes expected to be launched 
by  2024,  the  density  of  public  charging  points  in 
Malta  is  relatively  low.  Insufficient  measures  to 
tackle  traffic  congestion  might  hamper  clean 
mobility objectives. 

include 

As regards water, the main issues on surface 
water 
chemical  and  nutrient 
pollution;  for  groundwater  the  main  issues 
include  chemical  pollution,  saline  intrusion 
and  abstraction  exceeding  the  available 
groundwater 
the 
requirements 
Framework 
Directive (46), better integration of water objectives 
into  other  policy  areas  such  as  agriculture, 
transport  and  energy  is  needed.  For  agriculture 
this  should  be  undertaken  with  the  2023-2027 
strategic 
common  agricultural  policy 
plan (47). 

resource. 
of 

the  Water 

achieve 

(CAP) 

To 

(45)  Source: Handbook on the external costs of transport 

(46)  Directive 2000/60/EC of the European Parliament and of the 
Council of 23 October 2000 establishing a framework for 
Community action in the field of water policy, OJ L 327, 
22.12.2000, p. 1–73, (https://eur-lex.europa.eu/legal-
content/EN/TXT/?uri=celex%3A32000L0060) 

(47)  Draft strategic plans for all member states can be found 
here: https://ec.europa.eu/info/food-farming-fisheries/key-
policies/common-agricultural-policy/cap-strategic-
plans_en#publishednationalstrategicplans 

31 

0.02.04.06.08.010.0201620172018201920202021% of new registrationsMTEU27 
                                                 
   
 
Table A5.1: Indicators underpinning the progress on EU Green Deal from macroeconomic perspective 

(1)  The 2030 non-ETS GHG target is based on the Effort Sharing Regulation. The FF55 targets are based on the COM proposal to 
increase EU's climate ambition by 2030. Renewables and Energy Efficiency targets and national contributions under the 
Governance Regulation (Regulation (EU) 2018/1999). (2) Distance to target is the gap between Member States’ 2030 target under 
the Effort Sharing Regulation and projected emissions, with existing measures (WEM) and with additional measures (WAM) 
respectively, as a percentage of 2005 base year emissions. (3) Percentage of total revenues from taxes and social contributions 
(excluding imputed social contributions). Revenues from the ETS are included in environmental tax revenues (in 2017 they 
amounted to 1.5% of total environmental tax revenues at the EU level). (4) Covers expenditure on gross fixed capital formation to 
be used for the production of environmental protection services (i.e. abatement and prevention of pollution) covering all sectors, 
i.e. government, industry and specialised providers. (5) The climate protection gap indicator is part of the European adaptation 
strategy (February 2021), and is defined as the share of non-insured economic losses caused by climate-related disasters. 
(6) Sulphur oxides (SO2 equivalent), Ammonia, Particulates < 10µm, Nitrogen oxides in total economy (divided by GDP). 
(7) Transportation and storage (NACE Section H). (8) Zero emission vehicles include battery electric vehicles (BEV) and fuel cell 
electric vehicles (FCEV). (9) European Commission Report (2019) 'Benchmarking smart metering deployment in the EU-28'. 
(10) European Commission (2021). Each year the DESI is re-calculated for all countries for previous years to reflect any possible 
change in the choice of indicators and corrections to the underlying data. Country scores and rankings may thus differ compared 
with previous publications. 
Source: Eurostat, JRC, European Commission, EEA, EAFO 

32 

TargetTarget2005201920202030WEMWAM2030WEMWAMNon-ETS GHG emission reduction target (1)MTCO2 eq; %; pp (2)1.028%17%-19%-70-70-19%-70-70200520162017201820192020Share of energy from renewable sources in gross final consumption of energy (1)%0%6%7%8%8%11%12%Energy efficiency: primary energy consumption (1)Mtoe0.90.70.80.80.90.71.1Energy efficiency: final energy consumption (1)Mtoe0.50.60.60.70.70.50.8201520162017201820192020201820192020Environmental taxes (% of GDP)% of GDP2.72.62.52.52.52.32.42.42.2Environmental taxes (% of total taxation)% of taxation (3)9.18.68.48.28.37.76.05.95.6Government expenditure on environmental protection% of total exp.4.802.692.623.533.983.291.661.701.61Investment in environmental protection% of GDP (4) 0.750.130.140.16--0.420.380.41Fossil fuel subsidiesEUR2020bn0.010.010.010.010.01-56.8755.70-Climate protection gap (5)score 1-4Net GHG emissions1990 = 100949189909681797669GHG emissions intensity of the economykg/EUR'100.300.250.240.240.240.210.320.310.30Energy intensity of the economykgoe/EUR'100.090.080.080.080.080.070.120.110.11Final energy consumption (FEC)2015=100100.0100.8107.6114.0120.594.2103.5102.994.6FEC in residential building sector2015=100100.097.1114.1120.6129.3131.4101.9101.3101.3FEC in services building sector2015=100100.097.8106.1100.1105.5101.5102.4100.194.4Smog-precursor emission intensity (to GDP) (4)tonne/EUR'10 (6)0.930.800.620.540.52-0.990.93-Years of life lost caused due to air pollution by PM2.5per 100.000 inh.629533565610641-863762-Years of life lost due to air pollution by NO2per 100.000 inh.41< 1< 1< 1< 1-12099-Nitrate in ground watermg NO3/litre59.959.960.053.459.4-21.720.7-Terrestrial protected areas% of total-26.628.2-28.728.7-25.725.7Marine protected areas% of total-4.6--5.5--10.7-Organic farming% of total utilised agricultural area0.30.20.40.40.50.68.08.59.100-0606-1212-18Net land takeper 10,000 km213.011.05.0201520162017201820192020201820192020GHG emissions intensity of transport (to GVA) (7)kg/EUR'101.461.351.331.491.411.200.890.870.83Share of zero emission vehicles (8)% in new registrations0.30.10.41.42.31.21.01.95.4473622458812Share of electrified railways%------55.656.0-76.079.180.579.083.5-28.928.8-YearMTEUShare of smart meters in total metering points (9) - electricity% of total201897.335.8Share of smart meters in total metering points (9) - gas% of total20180.013.1ICT used for environmental sustainability (10)%2021-65.9Progress to policy targetsNational contribution to 2030 EU targetMALTAEU'Fit for 55'DistanceDistanceDigitalFiscal and financialindicators2.3 out of 4 (increase from historical level of 0.5). This is a low/medium risk category (4 being a high risk).ClimateEnergyPollutionBiodiversity2000-20062006-20122012-20182.56.129.3MobilityNumber of plug-in electric vehicles per charging pointCongestion (average number of hours spent in road congestion per year by a representative commuting driver) 
 
  
 
ANNEX 6: EMPLOYMENT AND SOCIAL IMPACT OF THE GREEN TRANSITION 
ANNEX 6: EMPLOYMENT AND SOCIAL IMPACT OF THE GREEN TRANSITION 

The  green  transition  not  only  encompasses 
environmental 
to 
improvements 
sustainability, but also includes a significant 
social  dimension. While  measures  in this  regard 
include the opportunity for sustainable growth and 
job creation, it must also be ensured that no one is 
left  behind  and  all groups  in  society  benefit  from 
the  transition.  Malta’s  green  economy  is  still 
its  development,  supported  by 
limited  and 
investments  and  reforms included  in  the  recovery 
and  resilience  plan  (RRP),  can  foster  sustainable 
growth and quality job creation; at the same time, 
the  green  transition  is  expected  to  affect  low-  to 
middle-income groups to a larger extent. 

Malta’s  RRP  outlines  important  reforms  and 
investments for a fair green transition. These 
include  renovation  of  public  buildings  such  as 
hospitals  and  schools,  decarbonisation  of  and 
enhanced  access  to  public  transport,  and  the 
development  of  green  skills  in  the  construction 
sector. In synergy with the Recovery and Resilience 
Facility, the European Social  Fund Plus (ESF+) will 
help develop ‘green skills’ in Malta. The integrated 
national  energy  and  climate  plan  of  December 
2019  analyses  the  impacts  on  the  quality  of  life, 
aggregating  social,  health  and  environmental 
aspects  into  a  single  criterion.  This,  however,  did 
not  allow  for  the  identification  of  trade-offs  or 
possible  mitigating  measures.  The  assessment  of 
the  employment  impact  and  skills  needs  remains 
very limited. 

Graph A6.1: Fair green transition challenges 

Source: Eurostat, World Inequality Database 

The  share  of  the  green  economy  in  overall 
employment  is  relatively  small,  providing  a 
very  high  potential  for  job  creation.  While  no 
specific declining sectors have been identified (48), 
upskilling  and  reskilling  of  harbour  workers  might 

(48)  SWD(2021) 275 final 

33 

be needed to support the greening of the two main 
Maltese  ports  (currently  using  burning  heavy 
fuel/gasoil),  which  are  key  enablers  of  the 
economy for growth and providing jobs, along with 
construction  and  tourism  sectors.  Malta’s  energy-
intensive industry, including metals, chemicals and 
paper (49),  provides  jobs  to  1.23%  of  the  total 
employed  workforce (50),  for  whom  upskilling  and 
reskilling  could  be  particularly  important  (see 
Annex  15).  At  the  same  time,  the  environmental 
goods  and  services  sector  provides  jobs  to  a 
comparatively  small  share  of  the  employed 
population  (1.6%  vs  2.2%  in  the  EU,  in  2019) (51) 
while  wind  and  solar  energy  potential  and  energy 
efficiency improvements offer major opportunities 
jobs (52).  Labour  shortages  were 
for  green 
identified in the energy sector (53). 

Ensuring  access  to  energy  services  appears 
overall  less  of  a  challenge  in  Malta (54).  A 
relatively  low  share  of  the  population  in  rural 
areas  is  at  risk  of  poverty  (2.9%  vs  18.7%  in  the 
EU) (55).  The  share  of  the  population  being  unable 
to  keep  their  homes  adequately  warm  decreased 
from  14.1%  in  2015  to  7.2%  in  2020,  below  the 
EU  average  (8.2%).  Lower-income  groups  are 
affected  most  (see  Graph  A6.2).  Consumption 
patterns  vary  across  the  population:  the  average 
carbon  footprint  of  the  top  10%  of  emitters  is 
about  four  times  higher  than  that  of  the  bottom 
50% of the population (less than the average 5.3 
times in the EU). 

(49)  2020 European Semester: Overview of Investment Guidance 
on the Just Transition Fund 2021-2027 per Member State 
(Annex D). 

(50)  Limited availability of data on employment in energy 

intensive industries reduces the reliability of this indicator.  

(51)  There is currently no common EU-wide definition of green 
jobs. The environmental goods and services sector (EGSS) 
accounts report only on an economic sector that generates 
environmental products, i.e. goods and services produced for 
environmental protection or resource management. 

(52)

https://publications.jrc.ec.europa.eu/repository/handle/J

RC126047. 

(53)  Eurofound (2021), Tackling labour shortages in EU Member 

States, Publications Office of the European Union, 
Luxembourg. 

(54)  Based on COM(2021) 568 final (Annex I) as a proxy for 

potential transport challenges in the context of the green 
transition (e.g. due to vulnerability to fuel prices). 

(55)  There seems to be limited availability of data on the risk of 
poverty in rural areas in Malta, which reduces the reliability 
of this indicator 

0.000.501.001.502.00GHG tonnes per Euroof gross added value(MS/EU)GHG tonnes perworker (MS/EU)Employment share inenergy-intensiveindustries (MS/EU)Share of population inrural areas at risk ofpoverty (MS/EU)Energy poverty(MS/EU)Carbon inequality(MS/EU)MaltaEU 2020Malta 2015 
 
  
                                                 
                                                 
 
 
Graph A6.2: Energy poverty by income decile 

Source: Eurostat 

Tax  systems  are  key  to  ensuring  a  fair 
transition towards climate neutrality (56). The 
labour  tax  wedge  for  low-income  earners (57) 
increased from 22.9% to 24% from 2015 to 2019 
(21.7% in 2021), compared to 31.9% in the EU in 
2021 (see Annex 17). 

(56)  COM(2021) 801 final. 

(57)  Tax wedge for a single earner at 50% of the national 
average wage (Tax and benefits database, European 
Commission/OECD). 

34 

0%5%10%15%20%25%12345678910Unable to keep home adequately warm (per income decile)Income decileMaltaEuropean Union 
  
                                                 
PRODUCTIVITY 
PRODUCTIVITY 
ANNEX 7: RESOURCE EFFICIENCY AND PRODUCTIVITY 
ANNEX 7: RESOURCE EFFICIENCY AND PRODUCTIVITY 

and 

innovations, 

technological 

Malta ranked 26th among EU countries in the 
Eco-innovation  Scoreboard.  A  successful 
transition  to  a  circular  economy  requires 
innovation. 
social 
Therefore,  eco-Innovation  is  an  important 
enabling  factor  for  the  circular  economy. 
Product design approaches and new business 
models  can  help  to  produce  systemic 
circularity 
new 
business  opportunities.  The  low  rank  of  the 
country  in  the  Eco-innovation  scoreboard 
indicates the country’s necessity to catch up 
with  its  eco-innovation  activities.  In  all  five 
components 
inputs,  eco 
(eco-innovation 
innovation activities, eco innovation outputs, 
resource  efficiency  outcomes  and  socio-
economic  outfits)  of  the  Eco-Innovation 
Index of 2021, Malta performs below the EU 
average. 

creating 

while 

minimising 

The  efficient  use  of  resources  is  key  to 
ensuring  competitiveness  and open strategic 
autonomy, 
the 
environmental  impact.  The  green  transition 
presents  a  major  opportunity  for  European 
industry 
clean 
creating  markets 
technologies  and  products.  It  will  have  an  impact 
across  the  entire  value  chains  in  sectors  such  as 
energy and transport, construction and renovation, 
food  and  electronics,  helping  create  sustainable, 
local and well-paid jobs across Europe.  

for 

by 

Malta  lags  behind  in  terms  of  resource 
productivity  and  circular  economy.  In  2020, 
the resource productivity in Malta with 2.45 EUR of 
GDP (in purchasing power standard) (58) generated 
per  kg  of  material  consumed  remains  slightly 
above  the  EU  average  of  2.23  EUR  of  GDP  (in 
purchasing  power  standard)  per  kg.  In  2020,  the 
circular  (secondary)  use  of  material  in  Malta 
increased from 4.2% in 2016 to 7.9%. This rate is 
still  below  the  EU  average  of  12.8%.  Waste 
generation in Malta has continued to increase over 
the  last  years.  This  growth  rate  is  well  above  the 
EU average. The Common Agricultural Policy (CAP) 
Strategic  Plan  for  Malta  should 
lead  to  an 
improved  management  of  natural  resources  used 
by agriculture.  

Table A7.1: Selected resource efficiency indicators 

Source: Eurostat 

(58)  The Purchasing Power Standard is an artificial currency that 
eliminates the effects of price level differences across 
countries.  

35 

SUB-POLICY AREA201520162017201820192020EU27 CircularityResource Productivity (Purchasing power standard (PPS) per kilogram)2.02.02.62.42.72.32.22020Material Intensity (kg/EUR)0.50.50.40.40.40.40.42020Circular Material Use Rate (%)4.64.26.58.37.77.912.82020Material footprint (Tones/capita)11.79.110.917.117.3-14.62019Waste Waste generation (kg/capita, total waste)-4287-5173--52342018Landfilling (% of total waste treated)-17.6-12.8--38.52018Recycling rate (% of municipal waste)10.912.611.510.59.110.547.82020Hazardous waste (% of municipal waste)-6.9-1.2--4.32018CompetitivenessGross value added in environmental goods and services sector (% of GDP)1.11.11.01.01.1-2.32019Private investment in circular economy (% of GDP)------0.12018Key indicators - MaltaLatest year EU 27 
 
 
 
                                                 
 
 
 
 
  
 
ANNEX 8: DIGITAL TRANSITION 
ANNEX 8: DIGITAL TRANSITION 

The Digital Economy and Society Index (DESI) 
monitors EU Member States’ digital progress. 
The  areas  of  human  capital,  digital  connectivity, 
the 
technologies  by 
businesses  and  digital  public  services  reflect  the 
Digital  Decade’s  four  cardinal  points (59).  This 
annex describes Malta’s DESI performance.  

integration  of  digital 

In  the  Maltese  recovery  and  resilience  plan, 
25.5%  of  the  expenditure  is  devoted  to  the 
digital  transition (60).  The  investments  focus  on 
the  digital 
public 
transformation  of 
administration, health and justice systems and, to 
a lesser extent, of the private sector. 

the 

Malta  records  good  scores 
in  the  DESI 
dimension on human capital, but digital skills 
shortages persist. The country has a high share 
of ICT graduates (6%, compared to the EU average 
of  3.9%) (61)  and  a  higher  than  average  share  of 
ICT 
specialists,  among  which  women  are 
comparatively  well  represented.  Nevertheless,  the 
share  of  firms  reporting  hard-to-fill  vacancies  for 
jobs  requiring  ICT  specialist  skills is  above  the  EU 
average (66.1% compared to 55.4%) (62). 

The country performs very well on broadband 
connectivity.  Already  since  2019,  all  Maltese 
households  are  reached  by  Very  High  Capacity 
Networks  offering  speeds  of  up  to  1Gbps.  5G 

Table A8.1: Key Digital Economy and Society Index Indicators 

(*) The 5G coverage indicator does not measure users’ experience, which may be affected by a variety of factors such as the type 
of device used, environmental conditions, number of concurrent users and network capacity. 5G coverage refers to the percentage 
of populated areas as reported by operators and national regulatory authorities. 
Source: Digital Economy and Society Index 

(59)  2030 Digital Compass: the European Way for the Digital 

(61)  Eurostat: Individuals with a degree in ICT, 2019 (table 

Decade Communication, COM (2021) 118 final. 

(60)  The share of financial allocation contributing to digital 

objectives has been calculated using Annex VII of the RRF 
Regulation. 

educ_uoe_grad03, using selection ISCED11=ED5-8 and 
ISCEDF_13 [F06]). 

(62)  Eurostat: ICT specialists - statistics on hard-to-fill vacancies 

in enterprises, 2020. 

36 

EUEU top-performanceHuman capitalDESI 2020DESI 2021DESI 2022DESI 2022DESI 2022At least basic digital skillsNANA61%54%79%% individuals202120212021ICT specialists4.6%4.4%4.9%4.5%8.0%% individuals in employment aged 15-7420192020202120212021Female ICT specialists11%11%26%19%28%% ICT specialists20192020202120212021ConnectivityFixed Very High Capacity Network (VHCN) coverage100%100%100%70%100%% households201920202021202120215G coverage (*)NA0%20%66%99.7%% populated areas2020202120212021Integration of digital technologySMEs with at least a basic level of digital intensityNANA73%55%86%% SMEs202120212021Big data24%31%31%14%31%% enterprises20182020202020202020CloudNANA47%34%69%% enterprises202120212021Artificial IntelligenceNANA10%8%24%% enterprises202120212021Digital public servicesDigital public services for citizensNANA10075100Score (0 to 100)202120212021Digital public services for businessesNANA9782100Score (0 to 100)202120212021Malta 
 
                                                 
                                                 
 
 
   
 
deployment is progressing quickly, but assignment 
of 5G spectrum is still low (25% compared to the 
EU average of 56%) (63). In addition, fibre coverage 
is  slightly  below  the  EU  average  (48%  compared 
to 50%). 

Maltese  firms  show  a  high 
level  of 
digitalisation.  The  large  majority  of  Maltese 
SMEs  have  at  least  a  basic  level  of  digital 
intensity.  Malta  performs  particularly  well  in  the 
use  of  technologies  such  as  big  data  and  cloud 
solutions,  but  there  is  a  gap  between  uptake  by 
large companies and SMEs. The uptake of artificial 
intelligence  is  lower,  although  slightly  above  the 
EU average.  

Malta  is  a  front-runner  in  digital  public 
services.  The  country  scores  well  above  the  EU 
average in providing digital public services for both 
citizens  and  businesses.  The  share  of  people 
interacting online with public authorities increased 
substantially  to  72%  of  internet  users,  exceeding 
the EU average (65%). 

(63)  Source: Communications Committee (COCOM) based on 

iDATE. 

37 

 
 
                                                 
ANNEX 9: INNOVATION 
ANNEX 9: INNOVATION 

This  annex  provides  a  general  overview  of 
the  performance  of  Malta’s  research  and 
innovation  (R&I)  system.  Malta  is  a  moderate 
innovator  according  to  the  2021  edition  of  the 
European  Innovation  Scoreboard (64),  but  the  R&I 
system remains underfunded. Total R&D spending 
reached 0.67% of GDP in 2020, which is far below 
the  national  target  of  2%  of  GDP  and  one  of  the 
lowest among EU Member States. 

R&I  activity  by  firms  remains 
limited. 
Business R&D spending in Malta stood at 0.43% of 
GDP  in  2020,  among  the  lowest  in  the  EU.  The 
volume of venture capital as % of GDP is declining 
and  is  also  among  the  lowest  in  the  EU.  On  a 
positive  note,  however,  the  share  of  employment 
in  fast-growing  enterprises  in  50%  of  the  most 
innovative  sectors  is  higher  than  EU  average  and 

increasing.  Public  support  for  business  innovation 
remains  limited.  After  a  slight  increase  between 
2010 and 2018, public sector support for business 
R&D  fell  to  0.038%  of  GDP  in  2019,  below  its 
2010  levels.  The  recovery  and  resilience  plan 
partly  addresses  this  challenge  as  it  provides  for 
the  finalisation  and  implementation  of  Malta’s 
smart  specialisation  strategy,  with  a  focus  on 
promoting 
simplifying 
administrative  processes.  This  could  be  a  starting 
point  towards  developing  a  fully  integrated  and 
easier-to-navigate  support  system  for  start-ups, 
SMEs and innovative companies.  

business 

and 

R&I 

public 

The  Maltese 
system 
continues  to  suffer  from  underfunding  and 
science-business  cooperation  remains  weak. 
stagnant  public  R&D 
Extremely 

low  and 

research 

Table A9.1: Key research, development and innovation indicators 

Source: European Commission 
Data: Eurostat, OECD, DG JRC, Science-Metrix (Scopus database and EPO’s Patent Statistical database), Invest Europe 

(64)  2021 European Innovation Scoreboard, Country profile: Malta 
https://ec.europa.eu/docsroom/documents/45925/attachment
s/1/translations/en/renditions/native  

investment  (0.24%  of  GDP  in  2020)  weighs 
heavily  on  Malta’s  scientific  performance.  The 
share of the country’s scientific publications within 
the  top  10%  most  cited  scientific  publications 

38 

CompoundEUannual growthaverage2010-20R&D Intensity (GERD as % of GDP)0.590.720.580.570.671.32.32Public expenditure on R&D as % of GDP0.230.350.210.220.240.50.78Business enterprise expenditure on R&D (BERD) as % of GDP0.360.370.360.350.431.81.53Scientific publications of the country within the top 10% most cited publications worldwide as % of total publications of the country 6.78.56.5::-0.49.9PCT patent applications per billion GDP (in PPS)0.31.21.1::17,1 3.5Public-private scientific co-publications as % of total publications5.466.87.35.60.49.05New graduates in science & engineering per thousand pop. aged 25-348.19.77.26.3:-7.516.3Total public sector support for BERD as % of GDP0.040.0450.0510.038:-0.80.196R&D tax incentives: foregone revenues as % of GDP0.0310.0190.0380.027:-1.50.100Share of environment-related patents in total patent applications filed under PCT (%) 15.9 44.0 5.4 :: -12.2  12.8Venture Capital (market statistics) as % of GDP0.010.010.0060.0070.006-40.054Employment in fast-growing enterprises in 50% most innovative sectors5.97.37.28.2:3.85.5Finance for innovation and Economic renewalKey indicators Quality of the R&I systemAcademia-business cooperationHuman capital and skills availabilityPublic support for business enterprise expenditure on R&D (BERD)Green innovation 2020Malta2010201520182019 
 
                                                 
 
 
  
 
worldwide,  as  a  percentage  of  the  country’s  total 
publications,  significantly  declined  between  2015 
and  2018  (6.5%  in  2018,  compared  to  8.5%  in 
2015).  Attracting  and  retaining  skilled  talents  for 
R&I is a key challenge for Malta. The country ranks 
low  among  Member  States  when  it  comes  to  the 
share  of  new  graduates 
in  science  and 
engineering,  which  has  been  on  a  declining  trend 
since  2010.  Evidence  also  suggest  that  Malta  is 
struggling to strengthen science-business linkages. 
After  increasing  to  7.3%  over  2010-2019,  the 
share  of  public-private  scientific  co-publications 
declined in 2020 to 5.6%. 

39 

 
ANNEX 10: INDUSTRY AND SINGLE MARKET 
ANNEX 10: INDUSTRY AND SINGLE MARKET 

restrictiveness  in  Malta  is  higher  than  the  EU 
average  for  several  professions  (tourist  guides, 
real  estate  agents,  accountants,  architects,  and 
civil  engineers)  except  for  lawyers,  for  which  it  is 
lower,  and  patent  agents,  which  is  not  regulated. 
The  RRP  measures  do  not  address  these  barriers. 
In  terms  of  its  track  record  in  incorporating  EU 
legislation into national law, Malta ranks above the 
EU average.  

Also  due  to 
its  geographical  position, 
economic  structure  and  size,  Malta  faces 
challenges  relating  to  input  prices,  supply 
chain  disruptions  and  shortages  of  skilled 
workers.  Compared  to  the  EU,  the  Maltese 
economy  has  a  relative  high  share  of  high  value 
services  sectors,  such  as  financial  services, 
information  and  communication  and  gaming.  In 
terms  of  shortages,  Maltese  firms  report  lacking 
staff  as  one  of  the  main  limiting  factors.  In  the 
production  process,  firms  rely  extensively  on 
imports  of  machinery,  energy  products  and 
chemicals 
from  other  EU  Member  States, 
especially  from  Italy,  but  also  from  extra-EU 
countries,  mainly  from  Asia.  This  dependency  on 
global markets puts extra pressure on input prices. 
Combined  with  low  shares  of  installed  renewable 
electricity  production  capacity, 
to 
production vulnerabilities. 

this  adds 

prosperity,  well-being 

Productivity  growth  is  a  critical  driver  of 
and 
economic 
convergence  over  the  long  run (65).  A  major 
source  of  productivity  for  the  EU  economy  is  a 
well-functioning  single  market,  where  fair  and 
effective  competition  and  a  business-friendly 
environment  are  ensured,  in  which  small  and 
medium  enterprises  (SMEs)  can  operate  and 
innovate  without  difficulty.  Businesses  and 
industry  rely  heavily  on  robust  supply  chains  and 
are facing bottlenecks that bear a negative impact 
on firms’ productivity levels, employment, turnover 
and entry/exit rates. This may impact the Member 
States’  capacity  to  deliver  on  Europe’s  green  and 
digital transformation.  

Malta’s  positive  productivity  development 
was  mainly  driven  by  the  services  sector. 
After  the  financial  crisis  in  2009  until  2020, 
Malta’s  total  factor  productivity 
increased  at 
higher  rates  than  the  rest  of  the  EU  due  to 
advancements  in  technology.  Labour  productivity 
was to a great extent driven by the high-tech and 
professional services sectors. 

Malta’s  business  environment  would  benefit 
from  reducing  payment  delays,  increasing 
improving  bankruptcy 
transparency  and 
rules. Firms in Malta have a well-developed digital 
infrastructure. Measures in the RRP aim to further 
improve  the  digitalisation of  public  administration 
and  public  services,  companies  and  the  justice 
system.  Most  firms  (76%  compared  to  an  EU 
average of 56%) report a high level of confidence 
in  investment  protection.  During  the  COVID-19 
pandemic, businesses in Malta received substantial 
financial  support,  such  as  loan  guarantees,  tax 
deferrals and a wage supplement scheme, keeping 
the level of bankruptcies low. However, in resolving 
insolvency,  the  country  ranks  among  the  worst 
performers in the EU and in terms of the recovery 
rate  would  benefit  from  reforming  its  regulatory 
framework.  Late  payments  are  an  additional 
barrier  to  SME  resilience  as  64%  of  firms  report 
payment delays versus 45% in the EU. 

Although  Malta  is  well  integrated  in  the 
regulated 
single  market,  barriers 
professions  and  compliance  gaps  remain. 
Despite  some  recent  measures  for  offering  more 
transparency  to  professionals  (e.g.  database  on 
regulatory 
regulated 

professions), 

for 

the 

(65)  European Commission (2022). Annual Sustainable Growth 

Survey, COM (2021) 740 final. 

40 

 
 
                                                 
 
Table A10.1: Key Single Market and Industry Indicators 

(Continued on the next page) 

41 

SUB-POLICY AREAINDICATOR NAMEDESCRIPTION20212020201920182017Growth ratesEU27 average*Value added by source (domestic)VA that depends on domestic intermediate inputs, % [source: OECD (TiVA), 2018]43.3962.6%Value added by source (EU)VA imported from the rest of the EU, % [source: OECD (TiVA), 2018]24.6419.7%Value added by source (extra-EU)% VA imported from the rest of the world, % [source: OECD (TiVA), 2018]3217.6%Cost competitivenessProducer energy price (industry)Index (2015=100) [source: Eurostat, sts_inppd_a]96969696960.0%127.3Material Shortage using survey dataAverage (across sectors) of firms facing constraints, % [source: ECFIN CBS]231081011109%26%Labour Shortage using survey dataAverage (across sectors) of firms facing constraints, % [source: ECFIN CBS]1617444037-57%14%Sectoral producer pricesAverage (across sectors), 2021 compared to 2020 and 2019, index [source:Eurostat]13.44.32.15.53.3n.a.9.8%Concentration in selected raw materialsImport concentration a basket of critical raw materials, index [source: COMEXT]0.160.140.170.210.25-36%17%Installed renewables electricity capacity Share of renewable electricity to total capacity, % [source:Eurostat, nrg_inf_epc]0.000.000.000.000%Net Private investmentsChange in private capital stock, net of depreciation, % GDP [source: Ameco]5.37.27.58.9-40.4%2.6%Net Public investmentsChange in public capital stock, net of depreciation, % GDP [source: Ameco]2.21.91.30.5340%0.4%HEADLINE INDICATORSEconomic structureRESILIENCEShortages/supply chain disruptionsStrategic dependenciesInvestment dynamics 
 
 
  
 
Table (continued) 

Source:  See above in the table the respective source for each indicator in the column “Description” 

42 

Single Market integrationIntra-EU tradeRatio of Intra-EU trade to Extra-EU trade, index [source: Ameco]1.301.211.191.501.1810%1.59Professional services restrictivenessRegulatory restrictiveness indicatorRestrictiveness of access to and exercise of regulated professions (professions with above median restrictiveness, out of the 7 professions analysed in SWD (2021)185 [source: SWD (2021)185; SWD(2016)436 final])5   425%3.37Professional qualifications recognitionRecognition decisions w/o compensationProfessionals qualified in another EU MS applying to host MS, % over total decisions taken by host MS [source: Regulated professions database]23.14500%Transposition - overall5 sub-indicators, sum of scores [source: Single Market Scoreboard]Above averageAbove averageAbove averageAbove averageInfringements - overall4 sub-indicators, sum of scores [source: Single Market Scoreboard]On averageOn averageOn averageBelow averageInvestment protectionConfidence in investment protectionCompanies confident that their investment is protected by the law and courts of MS if something goes wrong, % of all firms surveyed [source: Flash Eurobarometer 504]7656%BankruptciesIndex (2015=100) [source: Eurostat, sts_rb_a]n.a.n.a.n.a.n.a.n.a.n.a.70.1 (2020)Business registrationsIndex (2015=100) [source: Eurostat, sts_rb_a]n.a.n.a.n.a.n.a.n.a.n.a.105,6Late paymentsShare of SMEs experiencing late payments in past 6 months, % [source: SAFE]64.473.871.5n.a.n.a.-10%45%EIF Access to finance index - LoanComposite: SME external financing over last 6 months, index from 0 to 1 (the higher the better) [source: EIF SME Access to Finance Index]0.610.740.720.610.8%0.56 (2020)EIF Access to finance index - EquityComposite: VC/GDP, IPO/GDP, SMEs using equity, index from 0 to 1 (the higher the better) [source: EIF SME Access to Finance Index]0.050.170.280.68-92.7%0.18 (2020)% of rejected or refused loansSMEs whose bank loans’ applications were refused or rejected, % [source: SAFE]6.3011.813.48.9-28.9%12.4%SME contractorsContractors which are SMEs, % of total [source: Single Market Scoreboard]919296901.1%63%SME bidsBids from SMEs, % of total [source: Single Market Scoreboard]88859089-1%70.8%Business demographyAccess to financeBUSINESS ENVIRONMENT - SMEsPublic procurement SINGLE MARKETCompliance - cooperation EC and MS 
 
  
 
ANNEX 11: PUBLIC ADMINISTRATION 
ANNEX 11: PUBLIC ADMINISTRATION 

capacity 

administrative 

Good 
enables 
economic  prosperity,  social  progress  and 
fairness. Public administrations at all government 
levels deliver crisis response, ensure the provision 
of  public  services  and  contribute  to  building 
resilience  for  the  sustainable  development  of  the 
EU economy.  

Graph A11.1: Open data maturity 

Source: Open Data Maturity | data.europa.eu 

the 

Overall,  the  effectiveness  of  the  public 
administration 
is  around  the 
in  Malta 
average  in  the  EU (66).  Challenges  remain  as 
regards 
limited  use  of  evidence-based 
instruments  and  the  effectiveness  of  public 
consultations in the law-making process. Although 
various  channels  of  consulting  the  public  exist, 
there  is  certain  discretion  on  whether  to  initiate 
consultations  and  many 
large-scale  public 
exceptions  prevail.  The  outcomes  of  public 
consultation  procedures  are  not  always  published 
online 
timely  and  easily  accessible 
manner (67).  Moreover,  Malta  lacks  a  systematic 
approach  towards  reviewing  whether  laws  and 
regulations  have  achieved  the  intended  policy 
goals,  for 
instance  through  periodic  ex  post 
evaluations (68). Malta shows some weaknesses in 
the  public procurement  area  including  a  relatively 

in  a 

(66)  Worldwide Governance Indicators, 2020.  

(67)  Rule of Law Report 2020, European Commission 

lower share of procurement advertised on TED (69) 
(see Graph A11.2).  

Graph A11.2: Performance on the single market 
public procurement indicator 

(1) The competition and transparency indicators are triple-
weighted, whereas the efficiency and quality indicators have 
unitary weights. All others receive a 1/3 weighting in the SMS 
composite indicator. 
Source: Single market scoreboard 2020 data. 

on 

scores  well 

Malta 
e-government 
indicators,  but  lags  behind  for  open  data 
provision.  There  has  been  an  improvement  in 
uptake  of  e-government  services,  with  the  share 
of e-government users reaching 72% in 2021. The 
Maltese  RRP  places  a  considerable  focus  on  the 
digitalisation  of  the  public  administration  and 
public  services.  However,  open  data  policies 
remain weak. Malta ranks among the lowest in the 
EU  on  this  (see  Graph  A11.1),  lowering  the 
transparency  and  accountability 
public 
institutions to citizens.  

of 

States.  Malta’s 

Malta’s  civil  servants  are  younger  than  in 
other  Member 
public 
administration  continues  to  have  one  of  the 
youngest  age  profiles  in  the  EU,  ranking  first  for 
the proportion of public officials under 39 years of 
age (56.4%) and among the last for the share over 
55 years of age (15.6%). While the share of public 
servants  with  tertiary  education  is  one  of  the 
lowest  in  the  EU  (29.0%  compared  to  the  EU 
average  of  55.3%),  the  participation  of  public 
administration  employees  in  adult  learning  above 
the EU average. Gender parity in senior civil service 
management positions has improved considerably 
since 2017 and is above the EU average. 

(68)  The 2019 OECD report on Regulatory Policy and Governance 
indicates that Malta is well below the OECD average in terms 
of the ex post evaluation of regulation. 

(69)  Tenders Electronic Daily 

43 

00.10.20.30.40.50.60.70.80.9MTEU27 averageOpen Data PolicyOpen Data QualityOpen Data PortalOpen Data Impact 
 
  
                                                 
 
                                                 
 
Table A11.1: Public administration indicators – Malta 

(1) High values stand for good performance barring indicators # 7 and 8. 
(2) Measures the user centricity (including for cross-border services) and transparency of digital public services as well as the 
existence of key enablers for the provision of those services. 
(3) Break in the series in 2021. 
(4) Defined as the absolute value of the difference between the share of men and women in senior civil service positions. 
Source:  ICT use survey, Eurostat (# 1); E-government benchmark report (# 2); Open data maturity report (# 3); Fiscal Governance 
Database (# 4, 9, 10); Labour Force Survey, Eurostat (# 5, 6, 8), European Institute for Gender Equality (# 7), Single Market 
Scoreboard public procurement composite indicator (# 11); OECD Indicators of Regulatory Policy and Governance (# 12). 

instance 

The  justice  system  faces  serious  efficiency 
challenges.  The  duration  of  litigious  civil  and 
commercial  cases  at  first 
in  2020 
remained  very  long  (550  days),  continuing  an 
increasing trend since 2017. The duration of these 
proceedings  in  appeal  was  also  very  long  (838 
days).  Malta’s  RRP  takes  steps  to  improve  the 
quality  of  the 
justice  system  by  addressing 
existing  gaps  in  its  digitalisation.  The  plan  also 
includes reforms that aim to strengthen its judicial 
independence  particularly  by 
the 
method  of  appointment  and  dismissal  of  the 
judiciary. (70)  

reforming 

(70)  For a more detailed analysis of the performance of the 

justice system in Malta, see the 2022 EU Justice Scoreboard 

(forthcoming) and the country chapter for Malta in the 
Commission’s 2022 Rule of Law Report (forthcoming). 

44 

MT20172018201920202021EU27156.057.058.063.072.070.82nananana95.570.93nananana51.581.1477.172.172.172.1na56.8530.129.233.033.129.055.3615.520.624.217.323.518.6722.623.016.413.810.821.8814.716.114.014.215.621.390.770.770.770.77na0.72101.41.41.41.4na1.511-0.7-3.7-3.70.0na-0.7121.46nananana1.6Share of public sector workers between 55 and 74 years (3)Indicator (1)E-government Share of individuals who used internet within the last year to interact with public authorities (%)2021 e-government benchmark´s overall score (2) Open government and independent fiscal institutions2021 open data maturity indexScope Index of Fiscal InstitutionsEducational attainment level, adult learning, gender parity and ageingShare of public administration employees with tertiary education, levels 5-8  (3)Participation rate of public administration employees in adult learning (3)Gender parity in senior civil service positions (4)Public Financial Management Medium term budgetary framework indexStrength of fiscal rules indexPublic procurement composite indicatorEvidence-based policy makingIndex of regulatory policy and governance practices in the areas of stakeholder engagement, Regulatory Impact Assessment (RIA) and ex post evaluation of legislation  
                                                 
                                                                              
 
  
 
FAIRNESS 
FAIRNESS 
ANNEX 12: EMPLOYMENT, SKILLS AND SOCIAL POLICY CHALLENGES IN LIGHT OF 
ANNEX 12: EMPLOYMENT, SKILLS AND SOCIAL POLICY CHALLENGES IN LIGHT OF 
THE EUROPEAN PILLAR OF SOCIAL RIGHTS  
THE EUROPEAN PILLAR OF SOCIAL RIGHTS  

The European Pillar of Social Rights provides 
the  compass 
for  upward  convergence 
towards better working and living conditions 
in the EU. The implementation of its 20 principles 
on  equal  opportunities  and  access  to  the  labour 
market,  fair  working  conditions,  social  protection 
and inclusion, supported by the 2030 EU headline 
targets  on  employment,  skills  and  poverty 
reduction, will strengthen the EU’s drive towards a 
digital,  green  and  fair  transition.  This  annex 
provides  an  overview  of  Malta’s  progress  in 
achieving  the  goals  under  the  European  Pillar  of 
Social Rights. 

Table A12.1: Social Scoreboard for MALTA 

Update of 29 April 2022. Members States are classified on 
the Social Scoreboard according to a statistical methodology 
agreed with the EMCO and SPC Committees. It looks jointly at 
levels and changes of the indicators in comparison with the 
respective EU averages and classifies Member States in seven 
categories. For methodological details, please consult the 
Joint Employment Report 2022. Due to changes in the 
definition of the individuals' level of digital skills in 2021, 
exceptionally only levels are used in the assessment of this 
indicator; NEET: neither in employment nor in education and 
training; GDHI: gross disposable household income. 
Source: Eurostat 

The labour market performs well but the low 
participation  of  women  and  other  under-
represented groups affects labour shortages 
and  social  cohesion.  Malta’s  employment  rate, 
which  was  already  high  before  the  COVID-19 

45 

crisis,  further  improved  in  2020  and  in  the  first 
three  quarters  of  2021.  However,  the  gender 
employment gap remains one of the widest in the 
EU  (16.8  pps  in  2021),  though  registering  one  of 
the  highest  decreases  in percentage  points  within 
the  EU  over  the  last  decade  (from  31.4  pps  in 
2012).  The  provision  of  free  childcare  and  a 
‘making  work  pay’  strategy  contributed  to  this 
outcome.  At  29.4  pps  in  2020,  the  disability 
employment  gap  is  above  the  EU  average  (24.5 
pps). Malta also has one of the highest shares of 
low-skilled adults (36.1% vs 24.9% in the EU). The 
labour  market  participation  of  people  over  55, 
although increasing, is low in comparison to the EU 
average  (51.8%  vs  60.5%).  In  response  to  those 
challenges,  the  European  Social  Fund  (ESF)  is 
already  supporting  measures  to  strengthen  the 
provision  of  active  labour  market  policies,  with  a 
special  focus  on  vulnerable  people.  This  support 
will be increased through the European Social Fund 
Plus 
towards 
fostering gender equality in the labour market and 
the 
addressing  unpaid  care  activities.  While 
unemployment  rate  remains  significantly  below 
the  EU  average,  the  duration  of  unemployment 
benefits  (12  weeks  based  on  a  one-year  work 
history) is one of the shortest in the EU. The study 
of  the  unemployment  benefits  system  as  part  of 
the  recovery  and  resilience  plan 
(RRP)  will 
contribute to re-assessing and addressing possible 
reform needs in this area. 

targeted  actions 

(ESF+),  with 

the 

green  and 

A high rate of early school leaving, as well as 
low  levels  of  digital  skills  and  participation 
in  learning  among  low-skilled  adults  pose 
important  challenges,  notably  in  view  of 
accompanying 
digital 
transitions.  Although  on  a  long-term  downward 
trend, the early school leaving rate (11% in 2021) 
remains high compared to the EU average (9.7%), 
feeding  into  an  already  large  pool  of  low-skilled 
adults.  Among  18-64-year-old  low-skilled  adults, 
only  4%  (EU  average  12.4%)  participated  in 
learning  (during  the  4  weeks  preceding  the 
interview)  in  2021,  against  24.2%  (EU  average 
16.6%)  of  the  medium-skilled  and  278%  (EU 
average  20.7%)  of  those  with  tertiary  education. 
While  Malta  performs  relatively  well  regarding 
digital  skills  in  general,  the  difference  between 
groups by level of skills is significant. Only 37.1% 
(EU  average  31.9%)  of  people  with  a 
low 
education  level  had  at  least  basic  digital  skills  in 
2021, against 66.6% (EU average 49.7%) of those 

11.061.09.916.84.778.63.51.0125.519.922.621.029.42.829.70.0Critical situationTo watchWeak but improvingGood but to monitorOn averageEqual opportunities and access to the labour marketEarly leavers from education and training(% of population aged 18-24) (2021)Youth NEET(% of total population aged 15-29) (2021)Gender employment gap (percentage points) (2021)Income quintile ratio (S80/S20) (2020)Individuals' level of digital skills (% of population 16-74) (2021)Dynamic labour markets and fair working conditionsSocial protection and inclusionAt risk of poverty or social exclusion for children (in %) (2020)Disability employment gap (ratio) (2020)Better than averageAt risk of poverty or social exclusion (in %) (2020)Employment rate(% population aged 20-64) (2021)Unemployment rate(% population aged 15-74) (2021)Long term unemployment(% population aged 15-74) (2021)GDHI per capita growth (2008=100) (2020)Best performersImpact of social transfers (other than pensions) on poverty reduction (% reduction of AROP)  (2020)Children aged less than 3 years in formal childcare (% of under 3-years-olds) (2020)Self-reported unmet need for medical care (% of population 16+) (2020)Housing cost overburden (% of population) (2020) 
 
 
 
  
 
 
 
with  medium  and  91.9%  (EU  average  79%)  of 
those with high education levels. These gaps limit 
progress on addressing persisting labour shortages 
and  skills  mismatches,  including  in  sectors  linked 
to  the  twin  transition.  Educational  outcomes 
remain limited compared to the average in the EU, 
despite relatively high expenditure in the area (see 
Annex  13).  To  tackle  the  challenges  the  country 
faces  in  this  area,  Malta’s  RRP  envisages  reforms 
in  the  areas  of  skills,  early  school  leaving,  adult 
learning, 
the 
inclusiveness  and  diversity 
education  system,  and  reinforced  evaluation  and 
monitoring of educational policies, while the ESF+ 
will  support  training  and  upskilling.  Strengthening 
the  quality  and  inclusiveness  of  education  and 
training  is  key  for Malta  to  contribute  to  reaching 
the  2030  EU  headline  target  on  skills  and  on 
employment.  

in 

Poverty  risks  are  below  the  EU  average  in 
general, but remain  high  for  specific  groups. 
While 
the  at-risk-of-poverty-or-social-exclusion 
(AROPE) rate was 19.9% in 2020 (vs 21.6% in the 
EU), it was 28.2% for non-EU nationals, 28.5% for 
people  aged  over  65,  and  30.1%  for  people  with 
disabilities. The share of children at risk of poverty 
or  social  exclusion  declined  to  22.6%  in  2020, 
below  the  EU  average  of  23.9%.  However,  some 
groups of children are at a greater risk of poverty 
and  social  exclusion,  including  those  with  single 
(50.7%) or low-skilled parents (42.7%). The impact 
of  social  transfers  (other  than  pensions)  on 
poverty reduction declined further in 2020 to 21%, 
and  is  substantially  lower  than  the  EU  average 
(33.2%).  The  income  of  the  richest  20%  of  the 
population  was  4.7  times  higher  than  that  of  the 
poorest  20%  (below  the  EU  average  of  5  times), 
but  rose  substantially  compared  to  2019.  Malta 
has  one  of  the  lowest  housing  cost  overburden 
rates  in  the  EU  (2.8%  vs  EU  7.9%),  while  the 
indicator more than doubled since 2015, reflecting 
the tightening of the rental market brought about 
by  changes  in  the  country’s  demographics.  The 
Maltese  population  enjoys  generally  good  health 
and one of the longest life expectancies in the EU. 
Disparities in self-reported good health by income 
are among the largest in the EU, but unmet needs 
for  medical  care  are  relatively  low,  with  little 
variation  between  income  groups.  There  is  scope 
for  reinforced  social  policy  action  in  order  for 
Malta  to  contribute  to  reaching  the  2030  EU 
headline target on poverty reduction.  

46 

 
ANNEX 13: EDUCATION AND SKILLS 
ANNEX 13: EDUCATION AND SKILLS 

This  annex  outlines  the  main  challenges  for 
Malta’s  education  and  training  system  in 
light of the EU-level targets of the European 
Education  Area  strategic  framework  and 
other  contextual  indicators,  based  on  the 
analysis  from  the  2021  Education  and 
Training Monitor. Malta’s education and training 
system  struggles  with  ensuring  quality  of 
education and effectiveness of spending. 

Average levels of basic skills  – as measured 
by  the  PISA  test  –  are  low  and  significantly 
below  the  EU  average.  A  large  percentage  of 
pupils  fail  to  achieve  minimum  proficiency  levels 
(see  Table  A13.1).  While  the  proportion  of  top 
performers  has  decreased  since  2015, 
the 
percentage of underachieving pupils has remained 
practically unchanged and is above the EU average 
across  the  entire  socio-economic  distribution. 
Around  51%  of  pupils  from  the  bottom  socio-
economic  quartile  lack  basic  skills  in  reading  (EU 
36.4%). This is more than twice the rate in the top 
quartile  —  even  though  the  rate  for  the  top 
quartile is also comparatively high (24.3% vs 9.5% 

at EU level). Performance is strongly linked to the 
type  of  schools  a  pupil  attends,  with  a  gap 
between  private  and  public  schools  equivalent  to 
more 
indicating  a 
two  school  years, 
fragmentation  of  the  education  system.  Learning 
losses  expected  due  to  the  pandemic  risk  further 
aggravating the situation.  

than 

Public expenditure on education is above the 
EU average and increased in the last decade. 
General  government  expenditure  on  education, 
both  as  a  proportion  of  GDP  (5.3%  vs  EU  4.7%) 
and  as  a  proportion  of  total  general  government 
expenditure  (14.2%  vs  EU  10%),  was  among  the 
highest  in  the  EU  in  2019.  Given  low  education 
outcomes,  this  suggests  some  challenges  in  the 
efficiency  and  effectiveness  of  spending  and 
highlights 
the 
evaluation  of 
in  education  and 
training.  The  creation  of  a  comprehensive 
evaluation  framework  could  enable  the  cost-
effectiveness  of  investments  to  be  assessed  and 
support  national  decision-making  on  education 
and training. This would allow for better alignment 
among  structural  challenges,  education  goals  and 

for  strengthening 

investments 

the  need 

Table A13.1: EU-level targets and other contextual indicators under the European Education Area 
strategic framework 

Notes: The 2018 EU average on PISA reading performance does not include ES; u = low reliability,: = not available; data are not 
yet available for the remaining EU-level targets under the European Education Area strategic framework, covering 
underachievement in digital skills, exposure of vocational education and training (VET) graduates to work-based learning and 
participation of adults in learning. 
Source: Eurostat (UOE, LFS); OECD (PISA).. 

47 

96%96.9%91.9%91.9%201992.8%2019Reading< 15%35.6% 20.4%35.9%201822.5%2018Mathematics< 15%29.1% 22.2%30.2%201822.9%2018Science< 15%32.5% 21.1%33.5%201822.3%2018< 9 %16.3%11.0%11.0%9.7%Men19.2%12.5%12.3%11.4%Women13.0%9.4%9.5% 7.9%Cities20.8%9.6%15.8% 8.7%Rural areas12.0%u12.2%:u10.0%Native16.5%10.0%9.6%8.5%EU-born:u20.7%:u21.4%Non EU-born:u23.4%20.9%u21.6%45%31.9%36.5%42.4%41.2%Men27.3%31.2%36.4%35.7%Women36.9%41.8%49.6%46.8%Cities31.9%46.2%39.8%51.4%Rural areas29.8%26.9%55.1% 29.6%Native31.5%37.7%40.7%42.1%EU-born54.5%u32.7%49.6%40.7%Non EU-born31.0%27.0%45.4%34.7%13.7% 38.3%15.3%201938.9%2019Tertiary educational attainment (age 25-34)TotalBy genderBy degree of urbanisationBy country of birthShare of school teachers (ISCED 1-3) who are 50 years or overParticipation in early childhood education (age 3+)Low achieving 15-year-olds in:Early leavers from education and training (age 18-24)TotalBy genderBy degree of urbanisationBy country of birth20152021IndicatorTargetMaltaEU27MaltaEU27 
 
 
 
 
  
 
skilled  foreigners  in  a  buoyant  labour  market. 
Efforts  are  underway  to  better  align  vocational 
tertiary  education  with  labour  market  needs.  The 
COVID-19 
in 
participation in adult learning also in Malta. 

pandemic 

progress 

slowed 

these 

some  of 

The  reforms  and  investments  under  the 
Recovery  and  Resilience  Facility  will  help 
long-standing 
address 
challenges.  Key  measures  focus  on  reducing 
early  school  leaving,  improving  inclusiveness  and 
diversity  in  the  education  system,  reinforcing 
evaluation  and  monitoring  of  educational  policies 
and 
relevance  of 
labour  market 
increasing 
vocational education. 

policies implemented at all education levels. 

Participation  in  early  childhood  education  of 
children  above  the  age  of  3  increased  until 
2019 but dropped in 2020 with the pandemic. 
The  pandemic  has  impacted  on  the  provision  of 
childcare  services,  and  participation  in  formal 
childcare of children below 3 dropped significantly 
in 2020 (from 38.3% in 2019 to 29.7%), reversing 
the  positive  trend  experienced  in  previous  years 
thanks to the free childcare scheme.  

Graph A13.1: Low achievers in reading by student 
socio-economic status (ESCS), 2018 

Source: OECD, PISA 2018 

rate 

early-school-leaving 

Despite  a  substantial  decrease  since  2010, 
remains 
the 
relatively high in EU comparison.  A significant 
gap  exists  between  native-born  and  foreign-born 
young  people.  The  decreasing  trend  for  native-
born early school leavers in recent years indicates 
that the policies put in place to tackle early leaving 
are  achieving  results.  However,  the  persistently 
high values for foreign-born young people point to 
challenges with regard to equity and inclusion. This 
is  particularly  important,  as  the  share  of  pupils 
from abroad has significantly increased in the last 
decade. 

The  tertiary  educational  attainment  rate  is 
above the EU average (42.4% vs EU 41.2%). 
The rate has recorded one of the highest increases 
across  the  EU  since  2015.  This  positive  trend  is 
likely  to  be  driven  by  both  a  higher  number  of 
students participating in tertiary programmes  – in 
particular  women  –  and  strong  reliance  on  high-

48 

 
 
ANNEX 14: HEALTH AND HEALTH SYSTEMS 
ANNEX 14: HEALTH AND HEALTH SYSTEMS 

Especially  relevant  in  light  of  the  ongoing 
COVID-19 pandemic, resilient healthcare is a 
prerequisite  for  a  sustainable  economy  and 
society.  This  annex  provides  a  snapshot  of  the 
healthcare sector in Malta. 

Graph A14.1: Life expectancy at birth, years 

Private 

systems). 

Health  spending  relative  to  GDP  in  Malta 
remains  below  the  EU  average.  The  share  of 
public funding for health care is low (compared to 
the  EU  average  and  compared  to  other  tax-
financed 
out-of-pocket 
payments  are  among  the  highest  in  the  EU 
(especially  for  outpatient  care  and  medicines). 
Nevertheless, Malta reports one of the lowest self-
reported  levels  of  unmet  needs  in  the  EU,  while 
income-based  disparities  in  self-perceived  health 
are  among 
the  EU.  Public 
expenditure  on  health  is  projected  to  increase  by 
2.6  percentage  points  (pps)  of  GDP  by  2070 
(compared  to  0.9  pps  for  the  EU),  raising  long-
term fiscal sustainability concerns (71). 

largest 

the 

in 

Source: Eurostat 

Life expectancy in Malta is higher than in the 
EU as a whole, but fell in 2020 by over 7 months 
due  to  COVID-19.  As  of  17  April  2022,  Malta 
reported  1.23  cumulative  COVID-19  deaths  per  1 
000  inhabitants  and  173  confirmed  cumulative 
COVID-19  cases  per  1  000  inhabitants).  Cancer 

Table A14.1: Key health indicators 

Strengthening  primary  care  has  been  a  key 
objective  for  years  to  shift  service  delivery 
away  from  more  resource-intensive  hospital 
settings and to foster timely care for chronic 
conditions.  Although  the  numbers  of  medical 
staff are near the EU average, there are shortages 
in  certain  specialities  and  Malta’s  hospitals  are 
reliant  on 
foreign-trained  nurses. 
Another  challenge  is  to  ensure  the  availability  of 
affordable medicines. 

recruiting 

Notes: Doctors density data refer to practising doctors in all countries except FI, EL, PT (licensed to practice) and SK 
(professionally active). Nurses density data refer to practising nurses in all countries (data from 2014 for FI) except IE, FR, PT, SK 
(professionally active) and EL (nurses working in hospitals only). More information: https://ec.europa.eu/health/state-health-
eu/country-health-profiles_en . 
Source: Eurostat Database; except: * Eurostat Database and OECD, ** ECDC.  

mortality  is  lower  than  the  EU  average.  This  is 
partially  reflected  in  treatable  mortality  numbers, 
which are closer to the EU average. 

(71)  European Commission, 2021 Ageing Report 

(https://ec.europa.eu/info/publications/2021-ageing-report-
economic-and-budgetary-projections-eu-member-states-
2019-2070_en) 

49 

80.980.981.081.380.482.682.482.582.982.320162017201820192020EUMalta20162017201820192020EU average (latest year) Treatable mortality per 100 000 population (mortality avoidable through optimal quality healthcare)87.485.191.885.092.1 (2017)Cancer mortality per 100 000 population221.0221.1237.3203.5252.5 (2017)Current expenditure on health, % GDP 9.19.29.0:9.9 (2019)Public share of health expenditure, % of current health expenditure63.062.963.5:79.5 (2018)Spending on prevention, % of current health expenditure 1.31.31.32.8 (2018)Acute care beds per 100 000 population324.8317.5319.0311.9387.4 (2019)Doctors per 1 000 population *3.84.04.04.03.8 (2018)Nurses per 1 000 population *8.18.07.87.78.2 (2018)Consumption of antibacterials for systemic use in the community, daily defined dose per 1 000 inhabitants per day **18.419.818.018.714.414.5 (2020) 
 
   
 
                                                 
 
 
  
 
Graph A14.2: Projected increase in public 
expenditure on health care over 2019-2070 

Source: European Commission, 2021 Ageing Report, 
reference scenario 

Through  its  recovery  and  resilience  plan 
(RRP), Malta plans to invest EUR 69.9 million 
(more  than  20  %  of  the  total  RRP)  for  its  health 
system,  mainly  by  establishing  a  Blood  Tissues 
and Cells Centre, investing in new technologies and 
digitalisation. 

50 

6.65.40.92.60246810EUMalta% of GDP20192070increase 
   
ANNEX 15: ECONOMIC AND SOCIAL PERFORMANCE AT REGIONAL LEVEL 
ANNEX 15: ECONOMIC AND SOCIAL PERFORMANCE AT REGIONAL LEVEL 

is  an 

The  regional  dimension 
important 
factor  when  assessing  economic  and  social 
developments  in  Member  States.  Taking  into 
account  this  dimension  enables  a  well-calibrated 
and targeted policy response that fosters cohesion 
and  ensures  sustainable  and  resilient  economic 
development across all regions. 

Graph A15.1: Real GVA per worker 

Unit: real GVA in MM EUR (2015 prices) by employment in 
thousands of persons 
The light red circle shows the capital city region. The blue 
circles show the remaining NUTS2 regions. 
The green diamond shows the national average. The purple 
line shows the EU27 average. 
Source: European Commission 

level 

Despite  a  high 
of  broadband 
penetration  across  the  islands,  the  need  to 
improve  online  services  remains,  as  identified  by 
the 2021-2027 Malta Digital strategy, in particular 
in the area of health services. The 2021-2027 EU 
funds will support this digital transition. 

Malta  remains  a  moderate  innovator  in  the 
EU,  without  regional  disparity.  With  less  than 
1% of R&D expenditure/GDP recorded in 2020, it is 
far from the 2% EU target. This underperformance 
is  linked  with  the  SMEs  limited  research  and 
innovation  capacities.  2021-2027  EU  funds  will 
support these capacities in the areas identified by 
the national smart specialisation strategy. 

the  2019  EU  average. 

In  recent  years  Malta  has  recorded  strong 
economic  growth,  with  GDP  per  capita 
reaching 
This 
performance  hides  some  internal  disparities,  as 
outlined in the Commission country report (72): GDP 
per  capita  of  the  main  island  is  102%  of  the  EU 
average,  whereas  that  of  Gozo  and  Comino  are 
65%. The gap between the islands is being closed, 
in 
despite 
particular  thanks  to  EU  funds:  10%  of  cohesion 
and  agriculture  funds  are  allocated  to  Gozo  and 
Comino, for a population of 7%. 

insularity  constraints, 

the  double 

2014/2020  EU  funds  supporting  climate 
mitigating measures and the green transition 
will be continued over 2021/2027, with more than 
30%  of  the  budget  being  directed  to  climate 
action.  In  accordance  with  Annex  D  of  the  2020 
country report, the Just Transition Fund will focus 
on  social  and  economic  impacts  and  support  an 
investment  of  EUR  23  million  aiming  at  providing 
power  to  ships  docking  in  the  two  main  ports.

Table A15.1: GDP growth in regions 

Source:  European Commission 

(72)  COM(2019) 463 final. 

51 

NUTS 3 RegionGDP per head (PPS)GDP per head growth (2010-2019)Productivity (GVA (PPS) per person employed)Real productivity growthEmployment growthEU27=100, 20192010-2019EU27=100, 2018Avg % change on preceding year, 2010-20192010-2019European Union1001.391001.000.56Malta1003.71931.274.50Island of Malta1023.69941.274.56Gozo and Comino653.97741.483.47 
 
                                                 
  
 
 
 
  
 
MACROECONOMIC STABILITY 
MACROECONOMIC STABILITY 
ANNEX 16: KEY FINANCIAL SECTOR DEVELOPMENTS 
ANNEX 16: KEY FINANCIAL SECTOR DEVELOPMENTS 

This  annex  provides  an  overview  of  key 
developments in Malta’s financial sector. The 
size of Malta’s banking sector is at present above 
the  EU  average.  Only  six  other  Member  States 
show a higher ratio of total assets of the banking 
sector with respect to GDP. While the total banking 
sector continues to narrow, the share of domestic 
credit institutions has continuously increased since 
2015  and  now  represents  the  majority  of  the 
Maltese  banking  sector.  The  concentration  of  the 
banking  sector  is  significant  as  the  five  largest 
banks hold 74.8% of the sector’s total assets. 

Malta  scores  below  the  EU  average  on  the 
relevance  of  the  issuance  of  listed  shares,  debt 
securities  and  venture  capital. 
In  2021,  the 
Maltese supervisory authorities launched a capital 
markets  strategy  which  would  serve  to  create  a 
more  flexible  and  robust  regulatory  regime  to 
cater for the local capital markets. 

the 

levels  well  above 

The  banking  sector  has  performed  well 
despite  the  pandemic.  Banks  maintained  their 
capital 
regulatory 
requirements, in part, supported by the temporary 
restriction  on  dividend  payouts.  The  ratio  of  non-
performing  loans  increased  mildly  from  3.2%  in 
2019  to  3.6%  in  2020,  due  to  the  government 
support  measures,  and  declined  to  3.4%  in  Q3-
2021. Similar to other Member States, profitability 
recovered  in  2021,  but  still  remained  below  pre-
pandemic levels. The improvement in profits stems 
mainly  from  lower  provisioning  needs  following 
their  significant  increase  in  2020  to  mitigate  any 
possible losses due to the pandemic.  

On the development of non-bank finance, the 
market  funding  ratio  is  below  EU  average. 
The  market  funding  ratio  stood  low  at  35%  in 
2020, as bank loans are the most important form 
of  external  financing  for  non-financial  companies. 

Table A16.1: Financial soundness indicators 

(1) Last data: Q3 2021. 
Source: ECB, Eurostat, Refinitiv. 

52 

20172018201920202021Total assets of the banking sector (% of GDP)401.7342.2294.8309.8305.2Share (total assets) of the five largest bank (%)80.977.575.174.8-Share (total assets) of domestic credit institutions (%)142.147.853.558.761.3Financial soundness indicators:1- non-performing loans (% of total loans)3.13.13.23.63.4- capital adequacy ratio (%)21.122.323.425.125.8- return on equity (%)7.25.26.00.35.0NFC credit growth (year-on-year % change)14.83.52.02.7-6.4HH credit growth (year-on-year % change)6.57.58.75.89.7Cost-to-income ratio (%)140.640.550.349.353.8Loan-to-deposit ratio (%)161.475.257.459.657.4Central bank liquidity as % of liabilities0.5----Private sector debt (% of GDP)123.7121.4121.2138.8-Long-term interest rate spread versus Bund (basis points)96.499.092.599.287.1Market funding ratio (%)32.832.936.435.0-Green bond issuance (bn EUR)----- 
 
 
 
 
 
  
 
single  persons  at  the  same  wage  level.  In  2020 
the tax-benefit system helped reduce inequality as 
measured by the GINI coefficient, by less than the 
EU average.  

improved 

in  Malta. 

The  performance  of  the  tax  administration 
could  be 
In  2019, 
outstanding  tax  arrears  have  increased  by  15.2 
pps  to  117.6%  of  total  net  revenue.  This  is 
significantly  above  the  EU27  average  of  31.8%. 
The  VAT  gap  (an indicator  of  the  effectiveness  of 
VAT enforcement and compliance) has increased in 
Malta  to  23.5%,  significantly  above  the  EU-wide 
gap  of  10.5%.  The  high  foreign  direct  investment 
flows  and  the  high  level  of  dividend,  interest  and 
royalty payments as a % of GDP indicates the use 
of aggressive tax planning in Malta.  

ANNEX 17: TAXATION 
ANNEX 17: TAXATION 

This  annex  provides  an 
indicator-based 
overview  of  Malta’s  tax  system.  It  includes 
information  on  the  tax  structure,  i.e.  the  types  of 
tax that Malta derives most revenue from, the tax 
burden  for  workers,  and  the  progressivity  and 
redistributive  effect  of  the  tax  system.  It  also 
tax  collection  and 
provides 
compliance  and  on  the  risks  of  aggressive  tax 
planning activity, which appears high in Malta. 

information  on 

Malta’s  tax  revenues  are  low  in  relation  to 
GDP,  and  the  tax  system  relies  almost 
equally  on  labour  taxation  and  growth-
friendly  taxes.  In  2020,  Maltese  labour  tax 
revenues as % of GDP were among the lowest in 
the  EU.  By  contrast,  consumption tax  revenues  as 
%  of  GDP  were  only  slightly  below  the  EU 
aggregate and environmental tax revenues slightly 
above  it.  Malta’s  tax  system,  however,  is  heavily 
reliant  on  corporate  taxes.  Malta  does  not  have 
recurrent taxes on property. 

Malta’s  labour  tax  burden  is  relatively  low 
for different wage levels. The labour tax wedge 
for Malta in 2021 was substantially lower than the 
EU average at various income levels, i.e. for single 
persons at the average wage (100%) and at 50%, 
67%  and  167%  of  the  average  wage.  Second 
earners  at  a  wage  level  of  67%  of  the  average 
wage, whose spouse earns the average wage, also 
face  a  lower  tax  wedge  compared  to  the  EU 
average, and they are not taxed more heavily than 

Table A17.1: Indicators on taxation 

(1) Forward-looking Effective Tax Rate (OECD) 
(*) EU-27 simple average, as no aggregated EU-27 value 
Source:  European Commission and OECD. 

53 

2010201820192020202120102018201920202021Total taxes (including compulsory actual social contributions) (% of GDP)30.930.229.829.737.940.139.940.1Labour taxes (as % of GDP)9.910.911.012.420.020.720.721.5Consumption taxes (as % of GDP)11.911.310.810.410.811.111.110.8Capital taxes (as % of GDP)9.18.18.16.97.18.28.17.9Total property taxes (as % of GDP)1.01.31.10.71.92.22.22.3Recurrent taxes on immovable property (as % of GDP)0.00.00.00.01.11.21.21.2Environmental taxes as % of GDP2.82.52.52.32.42.42.42.2Tax wedge at 50% of Average Wage (Single person) (*)18.921.422.122.421.733.932.432.031.531.9Tax wedge at 100% of Average Wage (Single person) (*)26.430.530.731.030.841.040.240.139.939.7Corporate Income Tax - Effective Average Tax rates (1) (*)28.228.228.219.819.519.3Difference in GINI coefficient before and after taxes and cash social transfers (pensions excluded from social transfers)7.28.36.06.38.47.97.48.3Outstanding tax arrears: Total year-end tax debt (including debt considered not collectable) / total revenue (in %) (*)102.4117.631.931.8VAT Gap (% of VTTL)18.123.511.210.5Dividends, Interests and Royalties (paid and received) as a share of GDP (%)69.610.710.5FDI flows through SPEs (Special Purpose Entities), % of total FDI flows (in and out)95.896.147.846.236.7MaltaEU-27Tax structureProgressivity & fairnessTax administration & complianceFinancial Activity Risk 
 
 
 
 
  
 
Graph A17.1: Tax wedge indicators 

The tax wedge measures the difference between the total labour cost of employing a worker and the worker’s net earnings: sum 
of personal income taxes and employee and employer social security contributions, net of family allowances, expressed as a 
percentage of total labour costs (the sum of the gross wage and social security contributions paid by the employer).  
(1) The second earner average tax wedge measures how much extra personal income tax (PIT) plus employee and employer social 
security contributions (SSCs) the family will have to pay as a result of the second earner entering employment, as a proportion of 
the second earner’s gross earnings plus the employer SSCs due on the second earner’s income. For a more detailed discussion see 
OECD (2016), Taxing Wages 2016, OECD Publishing, Paris. http://dx.doi.org/10.1787/tax_wages-2016-en 
(*) EU-27 simple average as there is no aggregated EU-27 value. 
Source: European Commission 

54 

21.725.230.829.125.2At 50% of Average Wage (Singleperson)At 67% of Average Wage (Singleperson)At 100% of Average Wage (Singleperson)At 167% of Average Wage (Singleperson)For second earner at 67% of AverageWage (Two earner couple, 1st earner100% of AW) (1)Tax wedge 2021 (%)MTEU-27 (*) 
  
ANNEX 18: KEY ECONOMIC AND FINANCIAL INDICATORS 
ANNEX 18: KEY ECONOMIC AND FINANCIAL INDICATORS 

Table A18.1: Key economic and financial indicators 

(1) NIIP excluding direct investment and portfolio equity shares. 
(2) Domestic banking groups and stand-alone banks, EU and non-EU foreign-controlled subsidiaries and EU and non-EU foreign-
controlled branches. 
Source: Eurostat and ECB as of 2022-05-02, where available; European Commission for forecast figures (Spring forecast 2022) 

55 

2004-072008-122013-1820192020202120222023Real GDP (y-o-y)2.72.57.25.9-8.39.44.24.0Potential growth (y-o-y)2.73.16.05.93.23.13.73.8Private consumption (y-o-y)2.81.34.34.6-10.26.23.83.4Public consumption (y-o-y)1.03.33.213.115.86.19.01.4Gross fixed capital formation (y-o-y)6.2-1.310.88.4-7.619.32.54.9Exports of goods and services (y-o-y)7.77.45.77.0-5.68.25.54.7Imports of goods and services (y-o-y) 7.76.34.78.0-2.27.66.04.3Contribution to GDP growth:Domestic demand (y-o-y)3.31.24.85.9-3.68.04.02.9Inventories (y-o-y)-0.3-0.20.20.10.6-0.40.00.0Net exports (y-o-y)-0.51.52.1-0.1-5.31.80.11.1Contribution to potential GDP growth:Total Labour (hours) (y-o-y)0.50.72.83.71.70.81.41.4Capital accumulation (y-o-y)1.41.01.61.81.21.81.71.7Total factor productivity (y-o-y)0.81.41.50.40.20.50.60.7Output gap-0.6-1.32.44.8-7.0-1.3-0.9-0.7Unemployment rate6.96.54.93.64.43.53.63.6GDP deflator (y-o-y)2.12.32.52.41.51.72.82.6Harmonised index of consumer prices (HICP, y-o-y)2.12.91.11.50.80.74.52.6Nominal compensation per employee (y-o-y)2.93.33.43.8-0.75.53.82.9Labour productivity (real, hours worked, y-o-y)1.61.82.2-4.3-3.38.9-0.1-0.1Unit labour costs (ULC, whole economy, y-o-y)1.62.71.83.611.4-2.11.81.0Real unit labour costs (y-o-y)-0.50.4-0.71.29.8-3.8-1.0-1.6Real effective exchange rate (ULC, y-o-y)1.50.31.00.0....Real effective exchange rate (HICP, y-o-y)1.0-0.70.3-1.21.4-1.2..Net savings rate of households (net saving as percentage of net disposable income)........Private credit flow, consolidated (% of GDP)12.29.86.610.29.0...Private sector debt, consolidated (% of GDP)141.1163.3132.5121.3139.0...of which household debt, consolidated (% of GDP)46.757.651.247.654.0...of which non-financial corporate debt, consolidated (% of GDP)94.4105.681.373.785.1...Gross non-performing debt (% of total debt instruments and total loans and advances) (2)1.71.62.52.42.7...Corporations, net lending (+) or net borrowing (-) (% of GDP)........Corporations, gross operating surplus (% of GDP)29.431.336.237.937.6...Households, net lending (+) or net borrowing (-) (% of GDP)........Deflated house price index (y-o-y)13.5-0.93.04.22.2...Residential investment (% of GDP)7.44.13.54.63.93.7..Current account balance (% of GDP), balance of payments-5.3-3.83.45.0-2.9-6.1-8.7-8.7Trade balance (% of GDP), balance of payments-1.61.411.814.08.03.2..Terms of trade of goods and services (y-o-y)-0.10.00.80.40.10.1-1.2-0.5Capital account balance (% of GDP)2.31.31.30.80.61.0..Net international investment position (% of GDP)30.610.743.953.551.044.4..NENDI - NIIP excluding non-defaultable instruments (% of GDP) (1)86.8168.7214.1234.9254.9-764.8..IIP liabilities excluding non-defaultable instruments (% of GDP) (1)452.3698.9496.7280.5317.91801.2..Export performance vs. advanced countries (% change over 5 years).35.710.018.613.7...Export market share, goods and services (y-o-y)-0.72.33.24.44.2-1.60.80.4Net FDI flows (% of GDP)-154.7-77.5-82.5-68.5-74.7-65.8..General government balance (% of GDP)-2.9-3.20.30.6-9.5-8.0-5.6-4.6Structural budget balance (% of GDP)..-0.9-1.7-6.2-7.4-5.2-4.3General government gross debt (% of GDP)66.866.155.240.753.457.058.559.5forecast 
 
 
 
 
  
 
ANNEX 19: DEBT SUSTAINABILITY ANALYSIS  
ANNEX 19: DEBT SUSTAINABILITY ANALYSIS  

This  annex  assesses  fiscal  sustainability 
risks  for  Malta  over  the  short,  medium  and 
long term. It follows the same multi-dimensional 
approach as the 2021 Fiscal Sustainability Report, 
updated  on  the  basis  of  the  Commission  2022 
spring forecast. 

permanently  weaker  than  in  the  baseline.  The 
‘adverse interest-growth rate’ scenario assumes a 
less  favourable  snowball  effect  than 
in  the 
baseline.  In  the  ‘financial  stress’  scenario,  the 
country  temporarily  faces  higher  market  interest 
rates in 2022.  

Graph 2 shows the outcome of the stochastic 
projections.  These  projections  show  the  impact 
on  debt  of  2  000  different  shocks  affecting  the 
government’s 
economic 
growth,  interest  rates  and  exchange  rates.  The 
cone covers 80% of all the simulated debt paths, 
therefore excluding tail events. 

budgetary 

position, 

Table  2  shows  the  S1  and  S2  fiscal 
indicators  and  their  main 
sustainability 
drivers.  S1  measures  the  consolidation  effort 
needed to bring debt to 60% of GDP in 15 years. 
S2  measures  the  consolidation  effort  required  to 
stabilise  debt  over  an  infinite  horizon.  The  initial 
budgetary position measures the effort required to 
cover  future  interest  payments,  the  ageing  costs 
component  accounts  for  the  need  to  absorb  the 

Table  1  presents 
the  baseline  debt 
projections.  It  shows  the  projected  government 
debt  and  its  breakdown  into  the  primary  balance, 
the  snowball  effect  (the  combined  impact  of 
interest payments and nominal GDP growth on the 
debt  dynamics)  and  the  stock-flow  adjustment. 
These projections assume that no new fiscal policy 
measures  are  taken  after  2023  and  include  the 
expected  positive  impact  of  investments  under 
Next Generation EU.  

Graph  1  shows  four  alternative  scenarios 
around  the  baseline, to  illustrate the  impact 
of changes in assumptions. The ‘historical SPB’ 
scenario  assumes  that  the  structural  primary 
balance (SPB) gradually returns to its past average 
level.  In  the  ‘lower  SPB’  scenario,  the  SPB  is 

Table A19.1: Debt sustainability analysis for Malta 

Source: European Commission 

56 

Table 1. Baseline debt projections20192020202120222023202420252026202720282029203020312032Gross debt ratio (% of GDP)40.753.457.058.559.560.561.261.862.963.664.264.765.365.9Change in debt-3.012.73.61.51.00.90.70.61.10.70.60.60.60.6of whichPrimary deficit-1.98.26.84.43.53.33.12.83.02.92.92.92.92.9Snowball effect-2.14.4-4.3-2.6-2.5-2.3-2.4-2.2-1.9-2.3-2.3-2.3-2.3-2.3Stock-flow adjustment1.00.21.0-0.30.00.00.00.00.00.00.00.00.00.0Gross financing needs (% of GDP)5.416.215.712.712.412.212.112.012.312.312.412.512.612.7S1S2Overall index (pps. of GDP)1.210.1of whichInitial budgetary position1.43.4Debt requirement0.0Ageing costs-0.26.7of whichPensions-0.73.1Health care0.52.3Long-term care0.31.5Others-0.3-0.1                                                                       Table 2. Breakdown of the S1 and S2 sustainability gap indicators35404550556065707580852019202120232025202720292031Graph 1. Deterministic debt projections (% of GDP)BaselineHistorical SPB scenarioLower SPB scenarioFinancial stress scenarioAdverse 'r-g' scenariop10-p20p20-p40p40-p60p60-p80p80-p9035455565758520192020202120222023202420252026Graph 2. Stochastic debt projections (% of GDP)MedianBaseline 
 
 
 
  
 
Table A19.2: Heat map of fiscal sustainability risks for Malta 

(1) Debt level in 2032: green: below 60% of GDP, yellow: between 60% and 90%, red: above 90%. (2) The debt peak year 
indicates whether debt is projected to increase overall over the next decade. Green: debt peaks early; yellow: peak towards the 
middle of the projection period; red: late peak. (3) Fiscal consolidation space measures the share of past fiscal positions in the 
country that were more stringent than the one assumed in the baseline. Green: high value, i.e. the assumed fiscal position is 
plausible by historical standards and leaves room for corrective measures if needed; yellow: intermediate; red: low. (4) Probability 
of the debt ratio exceeding in 2026 its 2021 level: green: low probability, yellow: intermediate, red: high (also reflecting the initial 
debt level). (5) The difference between the 90th and 10th percentiles measures uncertainty, based on the debt distribution under 
2000 different shocks. Green, yellow and red cells indicate increasing uncertainty.  
Source: European Commission (for further details on the Commission’s multi-dimensional approach, see the 2021 Fiscal 
Sustainability Report). 

change 

in  ageing-related 

projected 
public 
expenditure  such  as  pensions,  health  care  and 
long-term  care,  and 
requirement 
measures  the  additional  adjustment  needed  to 
reach the 60% of GDP debt target. 

the  debt 

risk 

sustainability 

Finally,  the  heat  map  presents  the  overall 
fiscal 
classification 
(Table A19.2).  The  short-term  risk  category  is 
based  on  the  S0  indicator,  an  early-detection 
indicator of fiscal stress in the upcoming year. The 
medium-term  risk  category  is  derived  from  the 
debt  sustainability  analysis  (DSA)  and  the  S1 
indicator.  The  DSA  assesses  risks to  sustainability 
based  on  several  criteria: the  projected  debt level 
in 10 years’ time, the debt trajectory (‘peak year’), 
the plausibility of fiscal assumptions and room for 
tighter  positions  if  needed  (‘fiscal  consolidation 
space’),  the  probability  of  debt  not  stabilising  in 
the  next  5  years  and  the  size  of  uncertainty.  The 
long-term  risk  category  is  based  on  the  S2 
indicator and the DSA.  

macroeconomic  and 
financial  variables,  as 
illustrated  by  alternative  scenarios  and  stochastic 
simulations  (Table   A19.1  and  A19.2).  Moreover, 
the  sustainability  gap  indicator  S1  signals  that  a 
consolidation  effort  of  1.2  pps.  of  GDP  would  be 
needed to reduce debt to 60% of GDP in 15 years’ 
time  (Table 2).  Overall,  the  medium  risk  reflects 
the current large deficit, and debt level, as well as 
the sensitivity to adverse shocks.  

Long-term  risks  to  fiscal  sustainability  are 
high.  Over  the  long  term,  the  sustainability  gap 
indicator  S2  (at  10.1  pps.  of  GDP)  points  to  high 
risks,  while  the  DSA  points  to  medium  risks, 
leading to the overall high risk assessment. The S2 
indicator  suggests  that,  to  stabilise  debt  over  the 
it  will  be  necessary  to  address 
long  term, 
budgetary  pressures  stemming  from  population 
ageing, especially related to pensions, health care, 
and long-term care expenditure (Table 2).   

short-term 

Overall, 
fiscal 
sustainability are low. The Commission’s early-
detection  indicator  (S0)  does  not  signal  major 
short-term fiscal risks (Table  A19.2). 

risks 

to 

two  elements  of 

Medium-term  risks  to  fiscal  sustainability 
are  medium.  The 
the 
Commission’s  medium-term  analysis  lead  to  this 
conclusion.  First,  the  debt  sustainability  analysis 
(DSA) shows that government debt is projected to 
rise  from  about  59%  in  2022  to  around  66%  of 
GDP  in  2032  in  the  baseline  (Table 1).  This  debt 
path  is  also  sensitive  to  possible  shocks  to  fiscal, 

57 

BaselineHistorical SPBLower SPBAdverse 'r-g'Financial stressOverallMEDIUMLOWMEDIUMMEDIUMMEDIUMLOWDebt level (2032), % GDP6644797166Debt peak year20322024203220322032Fiscal consolidation space78%51%90%78%78%Probability of debt ratio exceeding in 2026 its 2021 level71%Difference between 90th and 10th percentiles (pps. GDP)26HIGHHIGHDeterministic scenariosStochastic projectionsLOWMEDIUMMEDIUMMEDIUMShort termMedium termLong termOverall                               (S0)Overall     (S1+DSA)S1Debt sustainability analysis (DSA)S2Overall     (S2+DSA)Overall