COMMISSION STAFF WORKING DOCUMENT 2023 Country Report - Malta Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the 2023 National Reform of Malta and delivering a Council opinion on the 2023 Stability Programme of Malta
Date: 2023-05-24
Institutions: European Commission, Secretariat-General
Subjects: Malta, economic policy, economic recovery, economic reform, energy policy, fiscal policy, green economy, investment, stability pact, stability programme

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 24.5.2023  SWD(2023) 618 final  COMMISSION STAFF WORKING DOCUMENT 2023 Country Report - Malta Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the 2023 National Reform of Malta and delivering a Council opinion on the 2023 Stability Programme of Malta {COM(2023) 618 final}  
 
 
 
 
 
ECONOMIC AND EMPLOYMENT SNAPSHOT 

Malta is maintaining its growth 
momentum in an uncertain 
environment 

After the pandemic, Malta’s economy has 
returned to robust economic growth. With 
the  exception  of  2020,  the  Maltese  economy 
has grown faster in recent years than most of 
the  other  EU  Member  States.  The  drivers  of 
the  strong  economic  performance  before  the 
pandemic  –  and  also  of  the  swift  recovery 
afterwards  (Graph  1.1)  –  were  fast-growing 
export-oriented  services  in  finance,  gaming, 
and tourism. 

Malta  has  recovered  rapidly  since  the 
COVID-19  crisis  and  appears  resilient 
overall. In 2021, the economy grew by 10.3% 
on  the  back  of 
improved  business  and 
consumer  sentiment,  strong  investment,  and 
the  reopening  of  the  country  to  tourism.  In 
2022, real GDP (i.e. GDP adjusted for inflation) 
grew by 6.9%, driven by growth in investment, 
consumer  spending  and  public  consumption. 
Contributing  to  the  growth  in  services  in 
general, tourism services rebounded quickly in 
2022,  both  in  terms  of  the  total  number  of 
visitors  and  in  terms  of  spending  by  tourists. 
Due  its  low  exposure  to  both  Russia  and 
Ukraine,  Malta  experienced  only  limited  direct 
impact  from  trade  disruptions  caused  by 
Russia’s  invasion  of  Ukraine.  The  Maltese 
banking  sector  appears  resilient  overall,  with 
strong liquidity and capitalisation. 

Growth  is  expected  to  slow  in  2023  and 
2024. In 2023, real GDP growth is forecast to 
moderate  to  3.9%  (from  6.9%  in  2022), 
following  a  wider  economic  slowdown 
in 
Malta’s main trading partners. In 2024, growth 
to  4.1%. 
is  expected 
Throughout  2022-2024,  growth  is  also  being 

to  climb  slightly 

supported  by  implementation  of  the  recovery 
and resilience plan (RRP) (1) (see Annex 3). 

Graph 1.1: Economic growth, 2011-2022 (% 
per year) 

* 2023 Winter Interim Forecast  
Source: Eurostat 

intervention. 

Inflation  in  Malta  has  been  limited  by 
government  intervention.  Inflation  in  2022 
reached  6.1%,  less  than  in  most  EU  Member 
States.  This  is  because  energy  prices  are 
levels  by 
currently  being  kept  at  2020 
government 
The  Maltese 
authorities  have  announced  that  they  will 
continue  to  limit  energy  prices  in  2023  and 
2024. Nonetheless, inflation in 2023 is still set 
to  reach  5.4%,  driven  by  prices  for  food, 
In  2024, 
transport,  and 
inflation is expected to slow to 2.8% as growth 
in import prices are set to moderate. Nominal 
wage  growth  (i.e.  wage  growth  that  is  not 
adjusted  for inflation) stood at 2.8% in 2022. 
However, as a result of the high inflation, real 

imported  goods. 

(1)  For more information, see 

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

2 

-10.-5.0.5.10.15.2010201120122013201420152016201720182019202020212022%EUMalta 
 
   
                                                 
wages decreased by 2.4% in 2022. In spite of 
the  adjustment  to  cost-of-living  mechanisms 
in  place,  nominal  wages  are  expected  to 
increase only moderately in 2023. 

Malta’s  employment  rate  surpassed  pre-
pandemic  levels  in  the  second  half  of 
2021  and  further  improved  in  2022.  On 
the  strong  post-pandemic 
the  back  of 
recovery, the employment rate (for those aged 
20-64)  reached  82.1%  by  Q4-2022.  Due  to  
favourable 
conditions  and  positive  net 
migration, annual employment growth reached 
6%  in  2022  and  is  expected  to  moderate  to 
2.3%  in  2023  and  2024.  The  unemployment 
rate  (for  those  aged  15-74)  reached  a  new 
historical  low  in  Q4-2022  of  2.9%  and  is 
expected to remain close to this level in 2023. 
In  this  robust  but  tight  labour  market,  the 
share  of  young  people  not  in  education, 
employment  or  training  and  the  long-term 
unemployment  rate  were  both  well  below  the 
EU  average  in  2022  as  shown  in  the  Social 
Scoreboard  supporting  the  European  Pillar  of 
Social Rights (see Annex 14). 

in  the 

Women  and  people  with  disabilities  still 
labour 
experience  difficulties 
market.  The  gap  between  the  employment 
rates  of  men  and  women  in  Malta,  despite 
narrowing  considerably  in  recent  years  and 
rate  now 
women’s  overall  employment 
exceeding the EU average, remains one of the 
largest  in  the  EU  at  13.1  pps  in  2022  and 
widens with age (see Section 3 and Annex 14). 
The  employment  rate  of  women  aged  55-64 
has  been  persistently 
low.  People  with 
disabilities  face  difficulties  in  finding  work, 
with  the  disability  employment  gap  standing 
at  27  pps  (vs  an  EU  average  of  23.1  pps  in 
2021). 

Malta has been experiencing shortages of 
skilled labour for a number of years, and 
has  a  large  share  of  low-skilled  adults. 
Due to a tight jobs market and poor education 
outcomes,  shortages  of  workers  and  skills 
have  increased  in  recent  years  (see  Annexes 
12  and  14).  Workers  with  specialist  skills  in 
information  and  communications  technology 
remain in particularly  short supply (see Annex 
10).  According  to  the  EU  survey  on  access  to 

to 

the 

and 

information 

recent  changes 

finance  for  enterprises (2),  35%  of  small  and 
medium-sized enterprises say that the lack of 
skilled  staff  is  one  of  their  most  pressing 
problems. The job vacancy rate increased from 
1.4%  in  the  first  quarter  of  2021  to  2.7%  in 
the  second  and  third  quarters  of  2022.  This 
vacancy  rate  has  been  exacerbated  by  the 
departure of skilled foreign workers during the 
pandemic.  There  are  higher  vacancy  rates  in 
the 
communications 
technology sector, in construction, and in trade. 
Despite 
law  on 
architects  and  civil  engineers,  the  regulatory 
restrictiveness  of  regulated  professions  in 
Malta remains greater than the EU average for 
accountants, estate agents, and tourist guides. 
This impedes competition on quality/prices and 
productivity  growth  in  the  regulated  sectors 
(see Annex 12). Additionally, Malta has a large 
share  of  low-skilled  adults  (33.1%  of  those 
aged  15-64  in  2022).  Among  the  low-skilled 
aged 18-64, only 3.8% participated in learning 
activities  over  the  previous  4  weeks  in  2021 
against an EU average of 13.3%. In 2022, the 
share  of  adults  aged  25  to  64  with  less  than 
upper  secondary  education  having  at  least 
basic  overall  digital  skills  is  above  the  EU 
average (43.7% vs 28.4%).  Thus, while noting 
Malta’s 
further 
inclusive upskilling and reskilling measures for 
all would help to achieve Malta’s 2030 target 
on skills. 

achievements, 

effective 

The  social  situation 
in  Malta  has 
remained  broadly  stable,  but  needs 
monitoring for certain groups. In 2021, the 
at-risk-of-poverty-or-social-exclusion rate was 
20.3%, higher than the 19.9% of the previous 
year  but  below  the  2019  value  of  20.7%. 
However, this rate was especially high among 
non-EU  nationals,  low-skilled  adults,  people 
with disabilities and people over 65, especially 
older  women.  Children  of  single  parents  or 
low-skilled  parents  were  at 
children  of 
particular  risk  of  poverty  or  social  exclusion 
(see  Section  3).  The  at-risk-of-poverty  rate  in 
2021  was  much  higher  among  workers  with 
temporary  contracts,  part-time  workers,  and 
the self-employed. Since 2020, Malta has seen 

(2)  European Commission (2022). Survey on access to 

finance of enterprises (SAFE), Analytical Report 2022. 

3 

 
                                                 
a  significant  increase  in  expenditure  on  social 
protection as a share of GDP. 

The government deficit is set to decrease 
but remains one of the highest in the EU. 
Malta’s  government  deficit  has  reached  5.8% 
of  GDP  in  2022.  The  increase  in  public 
expenditure  related  to  measures  to  mitigate 
the  impact  of  high  energy  prices  is  the  main 
reason  for  this  high  deficit,  despite  strong 
nominal  GDP  growth  and  the  phasing  out  of 
pandemic-related  support  measures.  The 
general  government  deficit  is  set  to  decrease 
to 5.1% of GDP in 2023 and to 4.5% in 2024. 
The  government-debt-to-GDP  ratio  is  set  to 
increase  to  53.4%  of  GDP  in  2022  and  reach 
56.1% in 2024. 

in 

Demographic  changes  and 
the  high 
reliance on corporate-tax revenues weigh 
on  the  sustainability  of  government 
finances  in  the  long  term.  Ageing  costs  in 
Malta  are  projected  to  rise  by  8.0%  of  GDP 
between  2019  and  2070  due  to  an  expected 
increase 
pensions, 
expenditure 
healthcare,  and  long-term  care.  Tax  revenues 
remain  highly  reliant  on  corporate  taxes, 
making the country more vulnerable to future 
economic  shocks.  Furthermore,  Malta’s  tax 
system may facilitate aggressive tax-planning 
practices.  The  country’s  commitments  to  curb 
these practices are a step in the right direction 
(see Section 3). 

on 

Malta  is  highly  dependent  on  energy 
imports  and  its  economic  growth  risks 
being 
environmentally  unsustainable. 
Fossil  fuels  still  play  a  major  role  in  Malta’s 
economy,  making 
it  highly  dependent  on 
energy  imports  and  highly  exposed  to  global 
price  developments.  Malta  has  one  of  the 
lowest 2030 targets (11.5%) for renewables in 
energy  consumption  in  the  EU.  However,  the 
government’s  commitment  in  2022  to  adopt 
offshore  renewable-energy  technologies  is  a 
major policy shift. Malta has scope to scale up 
its  energy-efficiency  measures,  especially  in 
its  residential  and  building  sectors.  Due  to 
continued high reliance on private cars, traffic 
congestion  and  high  emissions  from  road 
transport  persist.  Existing  measures  may  not 
be enough for a pronounced shift in the modes 
of  transport  used  away  from  cars.  With 

4 

remains  crucial.  The 

groundwater  over-extraction  and  risks  of 
increasingly  heavy  storms,  effective  water 
management 
rapid 
economic  development  and  over-construction 
in  the  country  threaten  biodiversity  and 
generate significant waste. This is exacerbated 
by  low  recycling  rates.  There  is  room  for 
targeted  measures 
to  develop  and  use 
innovative  digital  technologies  to  tackle  these 
environmental  challenges  (e.g.  applications  to 
support energy efficiency, water management, 
smart mobility, etc.). 

Research and innovation offer significant 
potential  to  increase  productivity  and 
competitiveness.  Malta’s 
research  and 
innovation  performance  remains  weak,  and 
continues to deteriorate. Its overall ranking on 
the index for research and innovation is 84.7% 
of the EU average. The greatest obstacles are 
low  investments  in  research  and  innovation, 
both by  businesses and the public sector, and 
the  lack  of  skilled  workers.  Growth  in  labour 
productivity in recent years followed a similar 
path  as  in  the  rest  of  the  EU,  albeit  with  a 
lower  growth  rate  in  2021  (4.3%  vs  7.0%  in 
the EU). 

Court  proceedings  are  very 
lengthy. 
Administrative cases at first instance in Malta 
are  estimated  to  take  the  longest  time  to  be 
resolved  of  any  country  in  the  EU.  The 
clearance rate for non-criminal cases has also 
deteriorated  and  is  particularly  concerning  for 
lack  of 
civil  and  commercial  cases.  The 
and 
(including 
resources 
infrastructure) and the prevalence of outdated 
work  practices  are  among  the  causes  of  the 
delays.  A  more 
stakeholder 
consultation  process  could  also  increase  the 
quality of the justice system. 

formalised 

skilled 

staff 

remain 

challenges 

sustainability 

Although  overall  Malta  performs  well  on 
the  UN’s  Sustainable  Development  Goals 
in 
(SDGs), 
environmental 
and 
inequalities.  Malta  performs  well  on  decent 
work  and  economic  growth  (SDG  8)  and  on 
macroeconomic  stability  (SDG  16).  It  is  also 
improving  on  SDG  indicators  on  productivity 
(SDGs  4  and  9).  In  addition,  it  performs  well 
(SDGs 3 and 8) or is improving (SDGs 4 and 5) 
fairness. 
on  most 

indicators 

related 

to 

 
Box1 

Energy-policy response in Malta 

Malta  took  significant  measures  to  mitigate  the  impact  of  energy-price  hikes  and 
support  households  and  businesses.  These  measures  were  mostly  untargeted  and  did  not 
preserve  the  price  signal  necessary  to  ensure  the  efficient  use  of  energy.  Malta  has  adopted 
various  support  measures  to  cushion  the  impact  of  energy-price  inflation  on  households  and 
businesses. For 2023, the gross budgetary costs of these support measures are projected in the 
Commission’s 2023 spring forecast to amount to 1.7% of GDP. Most measures do not preserve 
the price signal (i.e. they do not keep prices sufficiently high to act as an incentive to encourage 
people to use less energy) and are not targeted at the most vulnerable.  

In addition to government support on energy prices, food (grains and cereals) is also subsidised 
to cushion the impact of higher inflation. In 2022, Malta distributed a one-time bonus cheque of 
EUR 100  to  students  and  workers  whose  yearly  income  does  not  exceed  EUR 60 000,  and  a 
cheque  of  EUR 200  to  pensioners  and  people  receiving  social  benefits.  Several  benefits 
(allowances, pensions) targeting vulnerable people were also adjusted to  reflect the higher cost 
of living. 

Malta reported to the Commission that it has no companies that fall under Chapter III of Council 
Regulation  (EU)  2022/1854,  which  imposes  a  ‘windfall’  tax  on  the  profits  of  certain  fossil-fuel 
companies and refineries that benefited from higher energy prices. 

Malta has a high level of security for its gas supply, with a predictable medium-term 
contract  for  the  delivery  of  liquefied  natural  gas.  Liquefied  natural  gas  is imported  to  a 
terminal  to  fully  supply  natural  gas  to  two  electricity-generation  plants  covering  70%  of 
electricity demand. 

Malta  is  aiming  to  build  a  gas  interconnection  pipeline  with  Italy  (Project  of  Common 
Interest) to connect to the European gas network.  

it 

is  moving  away 

However, though status is still better than the 
EU  average, 
from 
addressing  poverty  and  inequalities  (SDGs  1 
and 10). Although Malta is improving on some 
of  the  indicators  related  to  environmental 
sustainability (SDGs 2, 9, 11, 12), it is moving 
away  from  SDG  7  (affordable  and  clean 
energy).  Malta  performs  well  on  life  below 
water (SDG 14), but it needs to catch up with 
the  EU  average  on  climate  action  (SDG  13) 
(see Annex 1). 

5 

 
 
THE RECOVERY AND RESILIENCE PLAN IS UNDERWAY 

health, 

Malta’s  RRP  aims  to  address  the  key 
challenges  related  to  climate,  the  digital 
transition, 
employment, 
education,  skills,  social  policies,  justice, 
taxation,  the  fight  against  corruption, 
and  the  fight  against  money  laundering. 
The  RRP  consists  of  30  reforms  and  17 
investments 
by 
EUR 258.3 million in grants, representing 1.7% 
of  Malta’s  2021  GDP  (see  Annex  3  for  more 
details).  

supported 

that 

are 

The  implementation  of  Malta’s  recovery 
and  resilience  plan  is  well  underway. 
Malta  submitted  one  payment 
request, 
corresponding to 19 milestones and targets in 
in  an  overall 
resulting 
the  plan  and 
disbursement  of  EUR  52.3  million  (in  grants) 
on  8  March  2023.  Nearly  all  milestones  and 
targets linked to Malta’s first payment request 
are  complemented  by  future  commitments  in 
the  RRP.  These  will  be  assessed  under 
subsequent payment requests.     

Malta  submitted  an  amendment  of  its 
plan  together  with  a  REPowerEU  chapter 
in  April  2023.  The  newly  proposed 
REPowerEU chapter is expected to address the 
challenges  related  to  energy  supply  and 
security,  and  to  speed  up  the  transition  to 
renewable energy sources. Furthermore, Malta 
is proposing some modifications in view of the 
decreased  total  allocation  and  to  adjust  to 
objective  circumstances.  These  amendments 
are 
the 
currently  being  assessed  by 
Commission,  and  once  adopted,  are  then 
subject to Council approval. 

The  following,  more  detailed 
review  of 
measures being implemented under the RRP in 
no way implies formal Commission approval or 
rejection of any payment requests. 

6 

Supporting the green transition  

that 

support 

(i)  adopted 

legislation  aiming 

With  54%  of  the  RRP’s  total  allocation 
dedicated  to  climate  and  environmental 
objectives,  Malta’s  plan  includes  several 
measures 
the  green 
transition.  As  part  of  the  first  set  of 
milestones  that  were  assessed  positively, 
Malta: 
to 
improve  the  regulatory  framework  for  the 
construction industry; (ii) adopted a strategy to 
manage  construction  and  demolition  waste; 
and (iii) carried out energy-performance audits 
of  two  public  school  buildings.  In  addition,  to 
make transport greener and reduce emissions, 
remote-working  office 
Malta: 
facilities 
(ii) 
completed a national household travel survey; 
and  (iii)  entered  into  an  agreement  with  the 
Local 
create 
regeneration areas in urban areas. In addition 
to  these  actions,  further  commitments  in  the 
RRP  in  this  area  include:  (i)  a  commitment  to 
carry  out  energy-performance  audits  of 
selected  public  buildings  (including  schools,  a 
hospital and offices); and the publication of a 
Sustainable  Urban  Mobility  Plan  for  the 
Valletta region.  

for  public-service  officials; 

(i)  set  up 

Association 

Councils 

to 

Strengthening the rule of law 

key 

role 

in 
The  RRP  played  a 
strengthening the rule of law in Malta in 
2021-2022.  Several  targets  and  milestones 
under  the  first  payment  request  strengthened 
independence.  For  example,  Malta 
judicial 
introduced  legal  amendments  to  change  the 
method  for  appointing  and  dismissing  judges 
and  magistrates.  This  changed  procedure  was 
applied  in  2021  when  four  judges  and  four 
magistrates  were  appointed  to  the  bench. 
Other  milestones  aimed  at  strengthening 

 
 
investigative 
prosecution  services  and  the 
branch. Legal amendments were also made to 
provide legislative clarity on the possibility for 
the  Attorney  General  to  bring  prosecutions 
before  the  Court  of  Magistrates.  In  addition, 
Malta introduced legal amendments to ensure 
that  the  decision  of  the  Public  Prosecutor  to 
not  prosecute  a  case  is  subject  to  judicial 
review. Through these amendments, five anti-
corruption bodies were given the status of the 
injured party at law in cases referred by them 
to  the  Attorney  General.  Furthermore,  the 
investigative  branch  as  strengthened  through 
a  reform  that  introduced  a  transparent  and 
competitive  process  for  appointing  police 
commissioners.  Two  milestones  were  also 
fulfilled  that  strengthen  Malta’s  fight  against 
fraud  and  corruption.  These  are  the  adoption 
revised  National  Anti-Fraud  and 
of  a 
Corruption  Strategy 
the  2008 
(updating 
legal  amendments  providing 
version)  and 
statutory  reinforcement  to  the  Permanent 
Commission Against Corruption. Upcoming RRP 
reforms  in  this  area  focus  mainly  on  further 
strengthening the prosecution services and the 
anti-corruption framework.  

Accelerating the digital transition 

The  Maltese  RRP  dedicates  26%  of  its 
total  allocation  to  digital  objectives. 
request,  Malta 
the  first  payment 
Under 
amendments 
legislative 
implemented 
permitting:  (i)  people  to  be  ‘present’  in  court 
through  live  video  conferencing  links;  and  (ii) 
the electronic filing of judicial documents. This 
will  pave  the  way  for  a  EUR 10 million 
digitalisation investment in the justice system. 
In  addition  to  these  achievements,  upcoming 
commitments  in  the  RRP  in  the  digital  area 
include,  for  example,  the  launch  of  calls  for 
applications for the digitalisation of companies 
the  digital 
and 
in 
hardware  and  software  of 
the  public 
administration. 

investments 

further 

Boosting research and innovation 

the 

EU’s 

adopted 

in  research 

such  as: 
infrastructure; 

To  accelerate  research  and  innovation, 
smart 
Malta 
specialisation  strategy  as  part  of  the 
first payment request. The strategy focuses 
on  a  number  of  key  initiatives  related  to 
(i) 
research  and 
innovation, 
investment 
(ii) 
support 
including 
through participation in Horizon Europe; (iii) the 
promotion  of  inter-agency  collaboration  to 
support  businesses;  and  (iv)  incentives  for 
industry stakeholders to innovate. As a follow-
up  to  the  strategy,  Malta  has  also  committed 
to  providing,  by  2024,  support  to  companies 
on 
by 
participating in European programmes.  

internationalisation 

internationalisation 

R&D 

and 

for 

Fostering socioeconomic 
sustainability 

The  RRP  strengthens  the  resilience  and 
sustainability  of  Malta’s  labour  market, 
pension  system,  and  healthcare  systems. 
Although  no  measures  in  these  areas  were 
part  of  the  first  payment  request,  upcoming 
commitments  in  the  RRP  in  this  area  include: 
(i) measures to improve the sustainability and 
the  current  pension  and 
adequacy  of 
the 
unemployment  benefits  systems; 
implementation  of  key  measures  of  the 
country’s  Employment  Strategy  and  (iii)  the 
implementation  of  key  measures  of  Malta’s 
action  plan  and  strategy  on  gender  equality 
and  on  taking  gender  into  account  in  all 
sectoral  policies.  On  health,  the  resilience  of 
the healthcare system will be strengthened by 
both:  (i)  the  reform  promoting  the  integration 
and  well-being  of  foreign health  workers;  and 
(ii)  the  investment  in  setting  up  a  centre  on 
blood, tissue and cells. 

(ii) 

7 

 
rules  in  Malta’s  legislative  framework,  aiming 
to  reduce  opportunities  for  corporate  profit 
shifting.  To  fight  money 
laundering  and 
financial  crime,  Malta  introduced  legislative 
amendments  in  2021  to  increase  the  powers 
and  capacity  of  its  Asset  Recovery  Bureau, 
while  reinforcing  the  Bureau’s  independence 
from the government. Further commitments in 
the  RRP  in  this  area  include:  (i)  the  entry  into 
force of transfer-pricing rules; (ii) the creation 
of a more comprehensive corporate tax return; 
and (iii) spontaneous exchange of information 
on new applicants for the country’s citizenship 
scheme. 
In  addition,  Malta  has  already 
implemented  all  the  actions  required  by  the 
evaluation  of  the  Financial  Action  Task  Force, 
and  was  taken  off  the  Task  Force’s  list  of 
jurisdictions  under  increased  monitoring  (grey 
list) in June 2022. 

Supporting quality inclusive 
education  

Malta  is  introducing  important  measures 
to support  quality  inclusive  education.  As 
part  of  the  first  payment  request,  two  new 
autism  units  have  been  set  up  in  middle 
schools. These new units have been given new 
operational  equipment  and  trained  personnel 
to  promote  the  further  integration  of  pupils 
with special needs into the mainstream school 
teachers  and 
environment.  Furthermore, 
learning-support  educators  are 
receiving 
continuous  training  in  how  to  teach  in  an 
further 
Beyond 
inclusive  way. 
commitments  in  the  RRP  in  this  area  include 
the  setting  up  of  two  new  multi-sensory 
learning  rooms  in  colleges  and  the  launch  of 
an e-college. 

this, 

Tackling aggressive tax planning 
and fighting money laundering 

A  number  of  milestones  and  targets 
fulfilled  under  the  first  payment  request 
will help to curb aggressive tax planning, 
money laundering, and financial crime. On 
taxation,  Malta  introduced  the  legal  provision 
enabling  the  introduction  of  transfer  pricing 

A Box 2:  Key deliverables under the RRP in 2023-2024 

  Contracts  signed  and  renovation  works  ongoing  to  increase  the  energy  efficiency  of 

selected public buildings (including schools, offices and a hospital) [Component 1] 

 

Entry into force of a new regulatory framework for the management of construction and 
demolition waste [Component 1] 

  Award of 1 000 grants to purchase electric vehicles and pedelecs by the private sector 

[Component 2] 

 

 

 

 

Support  of  at  least  1  000  individuals  from  low-income  families  to  mitigate  the  digital 
divide [Component 3] 

Launch of the bespoke tool for workforce planning in the health sector [Component 4] 

The  set-up  of  two  new  multi-sensory  learning  rooms  (physical  spaces  equipped  with 
equipment and trained education personnel) in schools [Component 5] 

Legislation  addressing  aggressive  tax  planning  concerns  stemming  from  inbound  and 
outbound dividend, interest and royalty payments [Component 6] 

  Capacity building within the Attorney General’s Office [Component 6] 

8 

 
 
FURTHER PRIORITIES AHEAD 

(vi) 

low 

the  country’s 

In  addition  to  the  challenges  addressed 
by the RRP, Malta faces other challenges 
not sufficiently covered in the plan. These 
include: 
low  share  of 
(i) 
renewable  energy; 
insufficient  energy 
(ii) 
efficiency;  (iii)  traffic  congestion;  (iv)  the  risks 
of  over-extraction  of  groundwater;  (v)  high 
rates  of  municipal-waste  generation  and 
landfill; 
levels  of  research  and 
innovation;  (vii)  a  lack  of  equal  opportunities 
for  all;  (viii)  risks  to  fiscal  sustainability;  (ix) 
risks  from  aggressive  tax  planning;  and  (x) 
inefficiencies in the justice system. Addressing 
these challenges will also help Malta to make 
further  progress  in  achieving  the  Sustainable 
Development  Goals  (SDGs),  such  as  the  SDGs 
on  affordable  and  clean  energy  (SDG  7), 
ending  poverty  (SDG  1),  gender  equality  (SDG 
5),  reduced  inequalities  (SDG  10),  and  quality 
education (SDG 4) (see Annex 1). 

Promoting the green transition 

fossil 

imports. 

In  2021, 

Although Malta does not import oil or gas 
from  Russia,  fossil  fuels  still  play  an 
outsized role in Malta’s economy, making 
its  energy  mix  highly  dependent  on 
energy 
fuels 
accounted  for  98%  of  the  country’s  energy 
mix  (natural  gas  provided  12%;  oil  and 
petroleum products provided 86%) (Graph 3.1). 
Fossil  fuels  are  used  for  most  of  Malta’s 
electricity  generation.  Although 
they  are 
increasing  in  share,  renewables  generate  only 
11.9%.  Subsidies  for  fossil  fuels  have  helped 
to  cushion  price  fluctuations  due  to  Russia’s 
war  of  aggression  against  Ukraine,  but  these 
incentives  for  a  swifter 
subsidies  reduce 
energy 
including  by  demand 
reduction. While energy prices have decreased, 
uncertainty  remains  regarding  next  winter, 
which requires continued efforts to structurally 
reduce gas demand. 

transition, 

offshore 

Malta  has  one  of  the  lowest  shares  of 
renewables  in  energy  consumption  in  the 
EU (see Annexes 1, 6 and 7). Malta’s target to 
reach  an  11.5%  share  of  renewables  in  all 
energy  consumption  is  below  the  2030  EU 
target  of  32%.  The  government  has  plans  to 
explore 
renewable-energy 
technologies,  but  specific projects  have  yet  to 
be identified (3). Grid capacity and flexibility is 
already  proving  to  be  a  bottleneck  for  the 
integration  of  renewables  and  for  increasing 
the  efficiency,  reliability  and  security  of  the 
further 
country’s 
deployment of solar panels on non-residential 
buildings, such as by making installation of the 
panels mandatory on all new buildings, would 
also  be  a  significant  step  forward.  It  would 
also  be  beneficial 
if  Malta  addressed 
challenges  that  prevent  the  installation  of 
solar  panels  on  the  rooftops  of  private 
buildings,  and  providing  additional  economic 
incentives  to  house-owners  to 
install  the 
panels.  

supply. 

power 

The 

Graph 3.1: Energy mix in Malta, 2021 

Source: Eurostat 

Malta  has  scope  to  scale  up  its  energy 
efficiency measures (see Annexes 6 and 7). 
Malta’s  contribution 
(1.5  toe  per  capita, 
compared with 2.2 toe per capita in Germany) 

(3)  According to the Global Wind Energy Council, Malta has 
an estimated technical potential of 25 GW in offshore 
wind/floating-solar power capacity. 

9 

42%50%8%GasOilRenewables 
 
  
                                                 
tools 

licensed  motor-vehicle  stock  reached  817 
vehicles per 1 000 persons in 2022, with only 
a  small  proportion  of  these  being  zero 
emissions  (see  Annex  6).  While  Malta’s  road 
licence fee is based on engine size and vehicle 
emissions,  smart  road-pricing  systems  that 
consider  the  time  of  day  and  distance 
travelled  would  be  more  closely  tied  to  the 
to 
‘polluter  pays’  principle.  Other 
disincentivise  private  car  use,  such  as 
congestion  charges  and  parking  fees,  are  not 
used  in  Malta.  Initial  data  on  the  uptake  of 
free  bus  transport  are  encouraging,  yet  bus 
use remains low overall, covering only 5.2% of 
all trips. A pronounced shift in transport modes 
away  from  private  cars  and  towards  public 
is  unlikely  until  service  quality 
transport 
(punctuality, 
is 
journey-duration 
improved. Malta announced an increase in the 
number  of  buses  and  in  the  frequency  of  its 
lanes  and 
bus  services.  Reserved  bus 
enforceable  rules  to  push  delivery  services 
outside  key  commuting  time-periods  would 
also be beneficial. 

time) 

Although  the  stock  of  e-scooters  has 
increased  considerably,  poor  quality 
infrastructure 
footpaths  and  cycling 
discourage  walking  and  cycling.  Walking 
and cycling represent 7% and 0.5% of all trips 
respectively.  Increasing  numbers  of  road-
traffic  accidents  involving  pedestrians  and 
cyclists  highlight  the  dangers  of  using  these 
in  Malta.  The 
two  modes  of 
transport 
deployment  and  maintenance  of 
safe, 
segregated and interconnected pavements and 
cycling/e-scooter 
promote 
routes 
walking,  cycling  and  the  safer  use  of  e-
scooters. Space for this infrastructure could be 
road-parking  spaces. 
made  by 
Increased enforcement of road-traffic rules, to 
accompany  increased  fines,  would  also  be 
beneficial. The timely deployment of mobility-
related  IT  tools  could  also  improve  traffic 
flows,  safety,  and  the  enforcement  of  traffic 
rules. 

removing 

could 

There  is  a  risk  that  groundwater  will  be 
over-extracted,  and  groundwater  quality 
in  Malta  is  deteriorating.  Groundwater  in 
Malta  is  under  strain  from  municipal  water 
supply, the agricultural sector, and the broader 

to the EU’s energy efficiency targets for 2030 
is  low.  Energy  consumption  in  residential 
buildings continues to increase (4). Malta would 
benefit  from  a  nationwide  system  to  monitor 
CO2  emissions  from  public  buildings.  The  use 
of  digital  technology,  such  as  applications  to 
monitor and regulate energy use, could help to 
increase 
Effective 
implementation  of  the  construction  industry's 
newly adopted regulatory framework, including 
the  licensing  of  general  contractors,  would 
increase 
the  quality,  safety  and  energy 
efficiency of construction.  

efficiency. 

energy 

in 

the 

bottlenecks 

transition, 
and 

Shortages of skilled workers in some key 
sectors  have  increased  in  recent  years 
due  to  a  lack  of  relevant  skills.  This  has 
created 
green 
transition.  In  2022,  shortages  of  workers 
were reported in Malta for six occupations that 
required  specific  skills  or  knowledge  for  the 
including  manufacturing 
green 
workers 
building-construction 
labourers (5).  The  job-vacancy  rate  recently 
increased  in  manufacturing  (from  1.7%  in 
2015  to  2.2%  in  2021),  although  it  fell  in 
construction  (from  4.8%  in  2015  to  1.7%  in 
2021) (6). 
In  2022,  shortages  of  skilled 
workers were reported as a factor constraining 
production in industry (for 33% of companies) 
and construction (for 36.4% of companies) (7). 
the  green 
reskilling 
Upskilling  and 
transition,  including  for  people  most  affected, 
and  promoting  inclusive  labour  markets  are 
essential policy levers to accelerate the green 
transition  and  ensure  its  fairness  (see  Annex 
8). 

for 

There  continues  to  be  traffic  congestion, 
high  emissions  from  road  transport,  and 
a high reliance on private cars. Private cars 
are  used  for  84%  of  all  trips  and  Malta’s 

(4)  From 77 600 tonnes of oil equivalent in 2016 to 

95 800in 2018 and 118 800 in 2021.  

(5)  Data on shortages are based on European Labour 

Authority (2023), EURES Report on labour shortages 
and surpluses 2022. Definition of shortages differs 
across countries. Skills and knowledge requirements are 
based on the ESCO (European Skills Competences and 
Occupations) taxonomy of skills for the green transition. 

(6)  Eurostat (JVS_A_RATE_R2). 

(7)  European Business and Consumer Survey. 

10 

 
                                                 
commercial  sector (8).  Population  growth  and 
tourism  increase  this  strain.  Measures  that 
disincentivise the extraction of groundwater by 
the  commercial  sector  and  incentivise  a  shift 
to  reclaimed  water  (such  as  groundwater 
consumption  fees),  would  be  beneficial.  More 
sustainable  construction  policies  to  limit  soil 
sealing  (see  Annex  6)  could  aid  groundwater 
replenishment.  It  would  also  be  useful  for 
Malta to: (i) better enforce obligations for new 
buildings  to  have  water  reservoirs  and  to  re-
use water run-off; and (ii) integrate rainwater-
the  design  of 
harvesting  objectives 
infrastructure  projects  (roads,  bridges,  etc.). 
The  need  for  measures  of  this  sort 
is 
especially  pressing  given  that  Malta  will 
increasingly face severe storms in the future. 

in 

it 

Malta  generates  a  very  large  amount  of 
municipal  waste  and  most  of 
is 
landfilled.  Municipal-waste  generation  stood 
at  611 kg  per  capita  in  2021,  among  the 
highest  in  the  EU  (EU  average  of  530  kg  per 
capita). The recycling rate for municipal waste 
was  only  13.5%  in  2021,  far  below  both  the 
EU  average  of  50%  and  the  2020  target  of 
50%. If current trends are maintained, Malta is 
on  course  to  miss:  (i)  the  2025  target  of 
preparing 55% of its municipal solid waste for 
re-use  and  recycling;  and  (ii)  the  2025  target 
of  recycling  65%  of  its  packaging  waste. 
Landfill  rates  are  high  and  on  an  increasing 
trend,  having  risen  from  79.5%  of  municipal 
waste in 2017 to 85% in 2021 (well above the 
EU  average  of  23%).  The  recently  adopted 
(2021-2030) 
waste-management 
provides  the  statutory  framework  to  increase 
both  waste  recycling  and  the  preparation  of 
waste for re-use.  

plan 

Malta’s  biodiversity  continues  to  decline. 
The  share  of  habitats  in  bad  conservation 
status  dramatically  increased  from  6.7%  to 
58.6%  in  2013-2018,  while  the  share  of 
species  in  bad  conservation  status  slightly 
increased  from  7.7%  to  8.9%.  The  main 
causes  of  this  are  rapid  development  and 
over-construction.  The  illegal  hunting  of  birds 
and  illegal  trapping  practices  create  further 

problems  for  wildlife.  In  2020,  only  0.6%  of 
Malta’s  agricultural 
land  area  was  under 
organic  farming,  far below  the  EU  average  of 
9.1%  and  what  is  deemed  necessary  to  meet 
the  target  of  having  25%  of  the  EU’s 
agricultural  land  under  organic  farming  by 
2030. 

Fiscal sustainability and taxation 

sustainability 

The  projected  future  growth  in  pension 
expenditure  poses  risks  to  the  long-term 
fiscal 
Malta’s 
of 
economy (9). 
In  2019,  public  pension 
expenditure  in  Malta  stood  at  7.1%  of  GDP, 
among  the  lowest  in  the  EU.  However,  while 
the burden of pension spending is expected to 
remain  stable  until  2045,  this  is  projected  to 
increase in the long-term to 10.9% of GDP by 
2070,  one  of  the  highest  projected  increases 
in the EU. This is mainly due to: (i)  significant 
gains in life expectancy; (ii) an increase in the 
share of the elderly population above the age 
of  80;  and  (iii)  an  insufficient  adjustment  to 
the early retirement age.  

Public  spending  on  health  and  long-term 
care  is  also  expected  to  increase  in  the 
long  run.  Government  expenditure  on  health 
care, relatively low at 5.4% of GDP in 2019, is 
projected to surge to 8% of GDP by 2070, well 
above  the  projections  for  the  EU  average 
(7.5%)  by  this  date.  Public  spending  on  long-
term  care  is  expected  to  increase  from  1.1% 
of GDP in 2019 to 3% by 2070.  

Malta’s tax revenues remain low and are 
highly reliant on corporate income taxes, 
making  the  fiscal  position  sensitive  to 
economic  shocks  (see  Annex  19).  The  share 
of  corporate  income  tax  in  total  tax  revenue 
(16.9%  in  2021)  continues  to  be  among  the 
highest in the EU. This can be partly explained 
by international companies being attracted by 
tax-refund  system,  which  allows 
Malta’s 
companies  to  reduce  their  effective  tax  rate 
from  35%  (nominal  tax  rate)  to  between  0% 

(8)  Extraction by the concrete sector increased from 

3 996 m3 in 2014 to 62 231 m3 in 2021, and extraction 
by the drinks sector increased from 7 643m3 in 2016 to 
36 310 m3 in 2021. 

(9)  See Annex 21. The debt-sustainability analysis shows 
that risks to the sustainability of Malta’s government 
finances are high in the long-term. 

11 

 
                                                 
                                                 
and 10% through tax credits and refunds. The 
implementation  of  the  EU  Minimum  Tax 
Directive,  ensuring  a  minimum  15%  effective 
rate  of 
large 
corporations,  requires  Malta  to  implement 
changes  to  its  tax  system  to  diversify  tax 
revenues and safeguard the overall stability of 
government finances.  

corporate 

taxation 

for 

suggest 

indicators 

Certain 
that 
companies  are  using  Malta’s  tax  system 
for  aggressive  tax  planning.  These  include 
the  persistently  high  level  of  foreign  direct 
investment  compared  to  the  size  of  the 
Maltese  economy  (which is  almost  exclusively 
held  by  legal  entities  that  have  little  or  no 
employment,  operations  or  physical  presence 
in  Malta)  (Graph  3.2);  and  (ii)  the  large 
payments of royalties, interest and dividends.  

Graph 3.2: Share of net inward and outward 
foreign direct investment (FDI) stock held by 
entities with no or little presence in Malta 
(SPE) 

(1) Net stock data have been used because data on 
assets and liabilities are unavailable for Malta. 
(2) 2020 data on net outward FDI is unavailable for 
Malta. 
Source: European Commission 

Malta  has  taken  significant  steps  and 
commitments  to  fight  aggressive  tax 
planning, but more is needed to close the 
existing  loopholes.  Malta  has  implemented 
international  and  European  agreed  initiatives, 
and  further  commits  to  tackle  the issue in  its 
RRP.  The  commitments  to  introduce  transfer 
commission  an 
pricing 
independent  study  on  inbound  and  outbound 
payments to be followed-up by legislation are 
steps 
right  direction,  yet  many 
in 
  Until  Malta  applies 
challenges 
withholding  taxes  on  interest,  dividends  and 
low-tax  or  zero-tax 
royalty  payments  to 

the 
remain. 

rules  and 

to 

jurisdictions  (or  until  Malta  takes  equivalent 
defensive measures)  to  ensure  that  profits  of 
firms  are  not  shifted  untaxed  to  countries 
outside  the  EU,  the  risks  of  double  non-
remain  high. 
these  profits 
taxation  on 
Furthermore, 
treatment  of 
the  Maltese 
resident non-domiciled companies continues to 
provide  multinational  firms  with  opportunities 
for  double  non-taxation  both:  (i)  between 
Malta  and  tax  havens;  and  (ii)  between  Malta 
and  most  countries  with  which  Malta  has 
concluded  a  bilateral  tax  treaty (10).  The  issue 
is only partly addressed by the EU’s Minimum 
Tax  Directive,  which  applies  only  to  large 
corporations. 

investor 

citizenship 

scheme 
Malta’s 
continues to raise serious concerns. These 
concerns relate in particular to security, money 
laundering,  tax  evasion,  and  corruption.  Since 
the 
January  2022,  Malta  has  allowed 
information  on 
spontaneous  exchange  of 
successful  applicants  of 
the  citizenship 
scheme with the authorities of the applicants’ 
original  jurisdiction  of  tax  residence,  in  line 
with its RRP commitment, but this is limited to 
new  applicants. 
In  September  2022,  the 
European  Commission  decided  to  refer  Malta 
to  the  Court  of  Justice  of  the  EU  for  its 
investor citizenship scheme.  

Increasing research and innovation 
to support productivity and 
competitiveness 

in  research  and 

Malta  is  falling  further  behind  the  EU 
innovation. 
average 
Although  Malta  is  ranked  as  a  ‘moderate 
innovator’  in  the  2022  European  Innovation 
Scoreboard, 
is 
below the EU average and the gap is becoming 
larger  (see  Annex  11).  Despite  Malta’s  good 
performance  in  areas  such  as  the  digital 

innovation  performance 

its 

(10)  A ‘resident non-domiciled company’ refers to a 

company incorporated in a given country but effectively 
managed in Malta. Because the firm is incorporated 
abroad, Malta only taxes profits realised in or remitted 
to Malta, while foreign profits that are not remitted to 
Malta are not subject to tax in Malta, leading to a 
situation of double non-taxation. 

12 

37%96%46%98%63%4%54%2%0%10%20%30%40%50%60%70%80%90%100%EU-27 ( total =  EUR13.461Bn)Malta (total =EUR196Bn)EU-27 (total = EUR16.197Bn)Malta (total = EUR60Bn)Net inward FDI (2020)Net outward FDI (2019)SPEsnon-SPEs 
   
                                                 
transformation  of  businesses,  including  the 
use  of  advanced  digital  technologies  (see 
Annex  10),  Malta’s  performance  in  research 
and innovation continues to suffer in particular 
from low levels of investment in research and 
innovation  and  a  lack  of  skilled  workers.  As 
laid  out  in  the  Green  Deal  industrial  plan,  to 
strengthen industrial competitiveness it will be 
crucial  for  Malta  to:  (i)  make  advances  in 
research  and  innovation;  (ii)  accelerate  its 
industries’ transition towards net zero; and (iii) 
invest  in  manufacturing  capacities  for  clean 
technologies. 

Low levels of investment in R&D, both by 
public institutions and businesses, remain 
an  endemic  issue  in  Malta.  Malta  has  one 
of  the  lowest  R&D  intensities  in  the  EU.  Its 
gross  domestic  expenditure  on  R&D  was  only 
0.64%  of  its  GDP  in  2021  against  the  EU 
average  of  2.26%.  Public expenditure  on  R&D 
has been stagnant since 2010, while business 
enterprise  expenditure  on  R&D  grew  only 
slightly over the last decade and decreased in 
2021.  The  share  of  small  and  medium-sized 
enterprises 
introducing  product  innovations 
also  decreased  between  2015  and  2022. 
Moreover,  the  level  of  government  financial 
support  for  private  R&D  is  low  in  Malta,  and 
has  decreased  over  the  last  decade.  The 
Maltese  RRP  does  not 
include  any  R&D 
investments,  with  the  Maltese  authorities 
intending  to  use  cohesion  funds 
instead. 
However,  the  R&D  investments  that  Malta 
plans  to  support  with  money  from  cohesion 
address 
funds 
underinvestment in R&D in Malta. 

insufficient 

appear 

to 

The  lack  of  skilled  talent  continues  to 
hamper  the  performance  of  the  Maltese 
research  and  innovation  system.  Although 
the  country  boasts  a  high  share  of  ICT 
graduates  and  ICT  specialists,  its  number  of 
new graduates in science and engineering per 
thousand population aged 25-34 has dropped 
since  2010  and  is  now  well  below  the  EU 
average (Malta ranks 26th among EU Member 
States  on  this  measure).  Similarly,  Malta’s 
share of R&D personnel as a percentage of its 
active population was less than half of the EU 
average  (see  Annex  1).  Difficulty  in  finding 
skilled  workers,  including  ICT  specialists,  is 
reported  as  a  significant  concern  for  Maltese 

13 

businesses (see Annexes 10 and 12). The lack 
of  skilled  workers  could  be  alleviated  by 
improving the quality of the education system 
(see  Annex  14),  reducing  requirements  for 
regulated  professions,  and  developing  an 
effective 
education 
system  (starting  in  primary  school  and  going 
all the way up to the highest education levels) 
to  attract  talented  people  into  scientific  and 
technological  careers,  retain  them  in  these 
areas, and develop their skills. 

comprehensive 

and 

There  is  scope  for  stronger  cooperation 
between  academia  and  business.  Malta  is 
one of the EU Member States with the lowest 
share  of  public  research  and 
innovation 
financed  by  businesses.  Moreover,  public-
private scientific co-publications in Malta as a 
share  of  all  publications,  although  have 
increased  in  2021,  are  still  below  their  2019 
level and slightly below the EU average. 

Ensuring equal opportunities 

favourable 

Despite 
employment 
conditions,  women  and  people  with 
disabilities  still  experience  difficulties  in 
the  labour  market.  The gender  employment 
gap, although shrinking fast in the last decade, 
remains one of the largest in the EU (13.1 pps 
vs  EU  10.6  pps  in  2022)  and  this  gap 
increases  with  age.  The  employment  rate  of 
women  aged  55-64  is  particularly  low  (see 
Graph  3.3).  This  translates  into  one  of  the 
widest  gender  pension  gaps  in  the  EU  (with 
Maltese  women  receiving  pensions  that  are 
46%  smaller  than  Maltese  men  vs  an  EU 
average  gap  of  25.9%  in  2021).  People  with 
disabilities face difficulties in finding jobs, with 
the disability-employment gap  standing at 27 
pps  (vs  an  EU  average  of  23.1  pps  in  2021). 
There  is  scope  for  strengthening  targeted 
policies  to  help  women  and  people  with 
disabilities to find work. The implementation of 
the  updated  Employment 
measures 
Strategy;  and  actions  to  both  improve  quality 
education  for  pupils  with  special  needs  and 
boost  the  employability  in  Malta’s  RRP  go  in 
the  right  direction  and  contribute  to  Malta’s 
progress towards its 2030 employment target. 

in 

 
Graph 3.3: Employment rate by detailed age 
group and sex 

Source: Eurostat, Labour Force Survey 

(30.4%), 

the  EU  average 

Poverty indicators in Malta are below the 
EU  average  in  general,  but  remain  high 
for  specific  disadvantaged  groups.  The 
share  of  Maltese  people  at  risk  of  poverty  or 
social  exclusion  stood  at  20.3%  in  2021, 
slightly  below 
(21.7%). 
However, this rate remained high among non-
EU  nationals 
low-skilled  adults 
(30.3%), people aged over 65 (29.9%), women 
(32.3%),  and  people  with  disabilities  (33.4%). 
Although the share of children in Malta at risk 
of  poverty  or  social  exclusion  remains  below 
the  EU  average,  children  of  single  parents  or 
children  with  low-skilled  parents  face  greater 
risk.  Measures  that  aim  to  reduce  the  risk  of 
poverty  among  disadvantaged  groups  would 
further  help  Malta  to  reach  its  2030  poverty-
reduction target.  

Income inequality has increased over the 
last  decade  and  is  now  above  the  EU 
average.  In  2021,  the  share  of  total  income 
received  by  the  20%  of  the  population  with 
the highest income was 5.03 times higher (EU: 
4.97  in  2021)  than  the  share  received  by  the 
20% of the population with the lowest income, 
against 4.69 times in 2020 and 4.01 times in 
2011.  The  poverty-reducing  impact  of  social 
transfers  (excluding  pensions)  improved  in 
2021  but  remains  at  26.2%  (vs  EU  37.1%), 
one of the lowest in the EU (see Annex 14). 

in  2019 

(38.3%).  Similarly, 

underachievement  by  students  remains 
considerable.  The  free-childcare  scheme 
launched  in  2014  for  working  or  studying 
parents led to a significant improvement (11) in 
participation in formal ECEC of children below 
the age of 3. However, the pandemic reversed 
this trend and the rate stood at 24% in 2021, 
significantly  below  both  the  EU  average 
(36.6%)  and  Malta’s  own  ECEC  participation 
rate 
the 
participation  of  children  aged  3  and  older  in 
ECEC saw one of the greatest decreases in the 
EU to 89.1% in 2020 (EU: 93%) from 96.9% in 
2015. The proportion of 15-year-olds in Malta 
underachieving  in  all  three  PISA  (Programme 
for 
Assessment) 
domains  is  among  the  highest  in  the  EU 
(22.6%  vs  13.2%).  Students’  socioeconomic 
background  has  a  considerable  impact  on 
education  outcomes  in  Malta  (see  Annex  15). 
Extending  the  free-childcare  scheme  to  all, 
regardless  of  their  working  status,  while 
investing 
teaching  could 
contribute  to  improved  education  outcomes 
and a more equitable education system.  

in  high-quality 

International 

Student 

Improving the efficiency and 
quality of the justice system 

has 

continued 

The  efficiency  of  the  Maltese  justice 
length  of 
system,  evidenced  by  the 
proceedings, 
to 
deteriorate.  The  estimated  time  needed  to 
resolve  administrative  cases  at  first  instance 
in Malta (1 356 days) is the longest in the EU, 
and  the  estimated  time  needed  to  resolve 
litigious  civil  and  commercial  cases  remains 
well above the EU average (see Annex 13).  

A  lack  of  resources  is  hindering  the 
efficiency  and  quality  of  justice.  Since 
early  2021,  the  number  of 
judges  and 
magistrates increased by nine (from a total of 
42);  five  of  whom  were  added  under  Malta’s 
RRP.  Notwithstanding  this,  the  judiciary  is 
calling  for  more  appointments  due  to  an 
increasing  caseload,  particularly  on  civil  and 

Participation in early childhood education 
is  decreasing,  and 
and  care 

(ECEC) 

(11)  The rate increased from 18.2% in 2014 to 38.3% in 

2019.  

14 

0.20.40.60.80.100.120.MT2022Men MTWomen MTMen EUWomen EU% of population 
  
                                                 
criminal  cases.  In  addition,  the  lack  of  office 
and  courtroom  space (12)  and  a  shortage  of 
skilled  staff  supporting  the  judiciary  continue 
to  cause  problems.  These  concerns  led  the 
Commission  to  issue  a  recommendation  to 
Malta in its 2022 Rule of Law Report.  

Outdated  work  practices  and  restricted 
hours  for  court  sittings  are  cited  as  a 
cause  of  court  delays.  The  use  of 
alternative  dispute-resolution  mechanisms (13) 
that  could  help  to  alleviate  the  number  of 
incoming cases in courts remains very limited 
in Malta. 

Malta  lacks  a  formalised  procedure  for 
legislative 
public  participation 
process (14).  Allowing  for  the  meaningful 
consultation  of  relevant  stakeholders  would 
also improve the quality of legislation. 

in  the 

(12)  Malta’s Association of Judges and Magistrates 

commented on ‘the acute lack of adequate space, […] 
and defined the situation as critical’; Rule of Law Report 
2022, European Commission.  

(13)  Alternative dispute resolution (ADR) makes it possible to 

settle a dispute complaint out of court with the 
assistance of an impartial dispute-resolution body. 
Examples of ADR include: mediation, conciliation, 
arbitration, and complaints boards.  

(14)  Rule of Law Report 2022, European Commission.  

15 

 
 
                                                 
KEY FINDINGS 

Malta’s  RRP 
address  a  series  of 
challenges through: 

includes  measures 

to 
its  structural 

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

 

 

 

 

judicial 

strengthening 
independence, 
the  police  and  public-
strengthening 
prosecutor  services,  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, 

 

 

improving  energy  independence,  reducing 
greenhouse-gas  emissions  (in  particular 
from  transport  and  by  improving  energy 
increasing  the 
efficiency 
share 
and 
energy, 
modernising the power grid;  

in  buildings), 
renewable 

of 

the 

over-extraction 

of 
curbing 
rainwater 
groundwater, 
harvesting,  increasing  waste  prevention, 
increasing 
recycling  of  municipal 
waste, and improving biodiversity;  

increasing 

the 

strengthening  the  digitalisation  of  the 
public sector; 

fostering  the  resilience  of  the  health 
system;  

  addressing  the  remaining  features  of  the 
tax  system  that  may  facilitate  aggressive 
tax planning; 

  alleviating  traffic  congestion,  improving 
the  quality  of  public  transport,  improving 
infrastructure for cycling and walking, and 
electrifying road transport; 

 

 

 

 

the 

improving 
of 
construction  and  demolition  waste  and 
reorganising waste collection; 

management 

commercial 

renovating 
public 
buildings,  including  one  hospital  and  two 
schools. 

and 

the 

should 

continue 

Malta 
steady 
implementation  of  its  recovery  and  resilience 
plan  and  swiftly  finalise  the  addendum, 
including  the  REPowerEU  chapter,  with  a  view 
to rapidly initiating its implementation. 

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

research  and 

fostering 
increasing 
human resource capacity;  

investments  and 

innovation  by 
improving 

  promoting  skills  needed  for  the  green 

transition; 

 

strengthening  targeted  policies  to  help 
women and people with disabilities to find 
work; 

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

  making  the  justice  system  more  efficient 

to reduce the length of court proceedings. 

16 

 
 
 
ANNEXES 

 
 
 
 
LIST OF ANNEXES 

Cross-cutting indicators 

A1.  Sustainable Development Goals 

A2.  Progress in the implementation of country-specific recommendations 

A3.  Recovery and resilience plan - overview 

A4.  Other EU instruments for recovery and growth 

A5.  Resilience 

Environmental sustainability 

A6.  European Green Deal 

A7.  Energy security and affordability 

A8.  Fair transition to climate neutrality 

Productivity 

A9.  Resource productivity, efficiency and circularity 

A10.  Digital transformation 

A11.  Innovation 

A12.  Industry and single market 

A13.  Public administration 

Fairness 

A14.  Employment, skills and social policy challenges in light of the European Pillar of Social Rights 

A15.  Education and training 

A16.  Health and health systems 

A17.  Economic and social performance at regional level 

Macroeconomic stability 

A18.  Key financial sector developments 

A19.  Taxation 

A20.  Table with economic and financial indicators 

A21.  Debt sustainability analysis 

LIST OF TABLES 

A2.1. 
A3.1. 

Summary table on 2019-2022 CSRs 
Key elements of the Maltese RRP('s) 

19 

22 

22 

24 

27 

29 

31 

32 

32 

37 

41 

43 

43 

45 

48 

50 

54 

56 

56 

58 

60 

62 

64 

64 

66 

68 

69 

24 
26 

 
 
 
A5.1. 
Resilience indices summarising the situation across RDB dimensions and areas 
A6.1. 
Indicators tracking progress on the European Green Deal from a macroeconomic perspective 
A7.1. 
Key energy indicators 
A8.1. 
Key indicators for a fair transition in Malta 
A9.1. 
Overall and systemic indicators on circularity 
A10.1.  Key Digital Decade targets monitored by DESI indicators 
A11.1.  Key innovation indicators 
A12.1. 
Industry and the single market 
A13.1.  Public administration indicators 
A14.1.  Social Scoreboard for Malta 
A14.2.  Situation of Malta on 2030 employment, skills and poverty reduction targets 
A15.1.  EU-level targets and other contextual indicators under the European Education Area strategic framework 
A16.1.  Key health indicators 
A17.1.  Selected indicators at region level in Malta 
A18.1.  Financial Soundness Indicators 
A19.1.  Taxation indicators 
A20.1.  Key economic and financial indicators 
A21.1.  Debt sustainability analysis - Malta 
A21.2.  Heap map of fiscal sustainability risks - Malta 

LIST OF GRAPHS 

Progress towards the SDGs in Malta in the last 5 years 

Total grants disbursed under the RRF 
Fulfilment status of milestones and targets 
Disbursements per pillar 
Cohesion policy funds 2021-2027 in Malta: budget by fund 
Synergies between cohesion policy funds and the RRF with its six pillars in Malta 
Cohesion policy funds contribution to the SDGs in 2014-2020 and 2021-2027 in Malta 
Thematic – greenhouse gas emissions from the effort sharing sectors in Mt CO2eq, 2005-2021 
Energy mix (top) and Electricity mix (bottom), 2021 
Thematic – environmental investment needs and current investment, p.a. 2014-2020 

A1.1. 
A2.1.  Malta’s progress on the 2019-2022 CSRs (2023 European Semester) 
A3.1. 
A3.2. 
A3.3. 
A4.1. 
A4.2. 
A4.3. 
A6.1. 
A6.2. 
A6.3. 
A7.1.  Malta´s retail energy prices for industry (top) and households (bottom) 
A8.1. 
A9.1. 
A9.2. 
A11.1.  R&D intensity in 2021 
A11.2.  New graduates in science and engineering per thousand population aged 25-34 in 2020 
A12.1.  Productivity per person by sector 
A12.2.  Shares of services exports 
A12.3.  Business environment and productivity drivers 
A13.1.  Higher education attainment level (in percent) of 25-64 year-olds by sector and occupation 
A13.2.  Open government data maturity indicator: 2022 scores (% of the total maximum score) (rhs); country ranking, overall score 

Fair transition challenges in Malta 
Trend in material use 
Treatment of municipal waste 

(lhs) 

A16.1.  Life expectancy at birth, years 
A16.2.  Projected increase in public expenditure on healthcare over 2019-2070 
A17.1.  GDP per capita (2021), productivity (2021) and GDP per capita growth (2011-2020) - Malta 
A18.1.  Evolution of credit activity by sector 
A19.1.  Tax wedge for single and second earners as a % of total labour costs, 2022 
A19.2.  Total outgoing dividends by Member States in % of GDP, 2021 

20 

30 
31 
36 
40 
42 
44 
48 
51 
53 
55 
56 
57 
59 
61 
63 
65 
67 
69 
70 

22 
23 
27 
27 
27 
28 
28 
29 
31 
32 
33 
37 
40 
42 
43 
47 
47 
49 
49 
51 
53 

54 
59 
59 
61 
63 
65 
66 

 
 
 
 
 
 
CROSS-CUTTING 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  and  the 
environmental crisis, 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.  The  graph 
below  is  based  on  the  EU  SDG  indicator  set 
developed  to monitor progress  on  the  SDGs  in  an 
EU context. 

related 

While Malta is improving on some of the SDG 
environmental 
indicators 
sustainability (SDGs 2, 9, 11, 12), it is moving 
away  from  SDG  7  (Affordable  and  clean 
energy). Malta performs well on SDG 14 (Life 

to 

final 

energy 

in  gross 

below  water).  However,  it  needs  to  catch  up 
with  the  EU  average  on  SDG  13  (Climate 
action). Although Malta’s energy consumption per 
capita  is  below  the  EU  average,  the  share  of 
renewable 
energy 
consumption (12.2%) is far below the EU average 
(21.8% in 2021). As for affordable energy (SDG 7), 
the  percentage  of  the  Maltese  population  unable 
to  keep  their  homes  adequately  warm  is  higher 
(7.8%  in  2021)  than  the  EU  average  (6.9%)  and 
(6.6%).  Waste 
has  deteriorated  since  2016 
generation per capita was significantly higher than 
the  EU  average  in  2020  (5.823  kg  vs.  4.813  kg) 
and  the  rate  of  recycling  for  municipal  waste  is 
less than a third of the EU average (13.6% against 
49.6%  for  the  EU  in  2021).  Various  measures  in 
the  recovery  and  resilience  plan  (RRP)  aim  to 
contribute  to  better  energy  efficiency,  clean 
energy,  sustainable  transport,  and  a  circular 
economy.  Examples 
include  energy-efficiency 
renovations  of  private  and  public  buildings, 
renewable energy investments in roads and public 

Graph A1.1: Progress towards the SDGs in Malta in the last 5 years 

For detailed datasets on the various SDGs, see the annual Eurostat report ‘Sustainable development in the European Union’: for 
details on extensive country-specific data on the short-term progress of Member States: Key findings - Sustainable development 
indicators - Eurostat (europa.eu). The status of each SDG in a country is the aggregation of all the indicators for the specific goal 
compared to the EU average. A high status does not mean that a country is close to reaching a specific SDG, but signals that it is 
doing better than the EU on average. The progress score is an absolute measure based on the indicator trends over the past 5 
years. The calculation does not take into account any target values as most EU policy targets are only valid for the aggregate EU 
level. Depending on data availability for each goal, not all 17 SDGs are shown for each country. 
Source: Eurostat, latest update of early April 2023, except for the EU Labour Force Survey (LFS) indicators released on 27 April 
2023. Data mainly refer to 2016-2021 or 2017-2022. 

21 

 
 
 
 
 
 
spaces, measures to promote sustainable mobility, 
and measures to improve waste management and 
increase 
including  of 
reuse, 
recycling  and 
construction and demolition waste. 

While  on  most  SDG  indicators  related  to 
fairness Malta performs well (SDGs 3 and 8) 
or  is  improving  (SDGs  4  and  5),  it  is  moving 
away  from  SDGs  on  addressing  poverty  and 
inequalities  (SDGs  1  and  10).  Malta  performs 
well on health-related indicators (SDG 3) with very 
low  self-reported  unmet  medical  needs  (0.1%  in 
2021  against  2%  for  the  EU).  On  SDG  4  (Quality 
education),  Malta  has  significantly  decreased  its 
share of early leavers from education and training, 
which  fell  from  14%  (2017)  to  10.1%  in  2022, 
although  it  remains  higher  than  the  EU  average 
(9.6%).  There  is  still  room  for  improvement  in 
increasing  basic  skills  levels  (35.9%  of  low-
achieving  15-year-olds  in  reading  literacy  against 
22.5%  for  the  EU  in  the  OECD  Programme  for 
International  Student  Assessment  (PISA)  2018). 
The  share  of  children  over  3  years  old  in  early 
childhood  education  considerably  decreased  from 
96.9%  in  2015  to  89.1%  in  2020  and  is  now 
below  the  EU  average  (93%).  Furthermore,  the 
gender  employment  gap  (SDG  5)  is  particularly 
wide  in  Malta  (13.1  percentage  points  (pps) 
against 10.7 pps for the EU in 2022). Reforms and 
investments  in  the  Maltese  RRP  help  strengthen 
measures  to  prevent  early  school  leaving  and 
expanding 
high-quality 
opportunities  for  upskilling  and  reskilling  for  all 
adults,  and  in  particular  for  people  who  are  low-
skilled, as well as promoting female labour market 
participation. 

education, 

inclusive 

in 

On  SDG  indicators  related  to  productivity, 
Malta  performs well  (SDG  8) or  is  improving 
(SDGs  4  and  9).  Malta  steadily  increased  its 
tertiary  education  rate  from  34.9%  in  2017  to 
42.4%  in  2022  (against  42%  for  the  EU).  In 
addition,  both  adult  participation 
learning 
(12.8%) and the percentage of adults with at least 
basic  digital  skills  (SDG  4;  61.2%)  are  above  the 
EU  average  (11.9%  and  53.9%,  respectively). 
However, 
the 
Maltese  research  and  innovation  system  suffers 
from  underinvestment  as  shown  by  the  indicator 
on gross domestic expenditure on R&D  (0.64% of 
GDP  in  2021  compared  to  the  EU  average  of 
2.26%) and the share of R&D personnel (0.69% of 
the active population in 2021 compared to the EU 
average  of  1.5%).  The  RRP  targets  bottlenecks 
regarding  digitalisation  to  improve  progress  on 

innovation 

(SDG  9), 

regarding 

meeting  SDG  9 
infrastructure).  

(Industry, 

innovation  and 

Malta  performs  well  on  SDG 
indicators 
related  to  macroeconomic  stability  (SDGs  8 
and 16). Malta further increased the employment 
rate from 73% in 2017 to 81.1% in 2022, which is 
very  high  compared  to  the  EU  average  (74.6%  in 
2022). The share of young people not in education, 
employment  or  training  is,  with  7.2%  in  2022, 
below  the  EU  average  (11.7%)  and  long-term 
unemployment  is  very  low  (1%  against  2.4%  for 
the  EU  in  2022).  Furthermore,  Malta  is  above  the 
EU average and further improving as regards SDG 
16 
institutions). 
justice,  and  strong 
However,  Malta  scores  worse  than  the  EU  as 
regards  the  Corruption  Perceptions  Index  (51 
compared  to  64  in  the  EU,  with  0  being  highly 
corrupt  and  100  being  very  clean).  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.  

(Peace, 

As the SDGs form an overarching framework, any 
links  to  relevant  SDGs  are  either  explained  or 
depicted with icons in the other Annexes. 

22 

 
 
 
ANNEX 2: PROGRESS IN THE IMPLEMENTATION OF COUNTRY-SPECIFIC 
RECOMMENDATIONS 

Graph A2.1: Malta’s progress on the 2019-2022 
CSRs (2023 European Semester) 

The Commission has assessed the 2019-2022 
country-specific  recommendations  (CSRs) (29) 
addressed  to  Malta  as  part  of  the  European 
Semester.  These  recommendations  concern  a 
wide  range  of  policy  areas  that  are  related  to  13 
of  the  17  Sustainable  Development  Goals  (see 
Annexes  1  and  3). The  assessment  considers  the 
policy  action  taken  by  Malta  to  date (30)  and  the 
commitments  in  its  recovery  and  resilience  plan 
(RRP) (31).  At  this  stage  of  RRP  implementation, 
56%  of  the  CSRs  focusing  on  structural  issues 
from  2019-2022  have  recorded  at  least  ‘some 
progress’,  while  44%  recorded  ‘limited  progress’ 
(see  Graph  A2.1).  As  the  RRP  is  implemented 
further,  considerable  progress 
in  addressing 
structural CSRs is expected in the years to come. 

Source: European Commission. 

(29)  2022 CSRs: EUR-Lex - 32022H0901(18) - EN - EUR-Lex 

(europa.eu) 

      2021 CSRs: EUR-Lex - 32021H0729(18) - EN - EUR-Lex 

(europa.eu) 

      2020 CSRs: EUR-Lex - 32020H0826(18) - EN - EUR-Lex 

(europa.eu) 
2019 CSRs: EUR-Lex - 32019H0905(18) - EN - EUR-Lex 
(europa.eu) 

(30)  Including policy action reported in the national reform 

programme and in Recovery and Resilience Facility (RRF) 
reporting (twice a year reporting on progress in implementing 
milestones and targets and resulting from the payment 
requests assessment). 

(31)  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 considers the 
degree of implementation of the measures included in the 
RRP and of those carried out outside of the RRP at the time 
of assessment. Measures laid down in the Annex of the 
adopted Council Implementing Decision on approving the 
assessment of the RRP, which are not yet adopted or 
implemented but considered 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. 

23 

Limited progress44%Some progress39%Substantial progress17% 
 
 
 
 
 
                                                 
   
 
 
 
Table A2.1: Summary table on 2019-2022 CSRs 

(Continued on the next page) 

24 

MaltaAssessment in May 2023*RRP coverage of CSRs until 2026**Relevant SDGs2019 CSR 1Limited 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. SDG 3,82019 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. SDG 8, 16Strengthen the overall governance framework, including by continuing efforts to detect and prosecute corruption. Some progressRelevant RRP measures planned as of 2020 to 2026.SDG 16Continue 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.SDG 8, 16Strengthen 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.SDG 162019 CSR 3Some progressFocus investment-related economic policy on research and innovation, Limited progressRelevant RRP measures planned as of 2022 to 2026. SDG 9natural resources management, Limited progressRelevant RRP measures planned as of 2021 to 2025.SDG 6, 12, 15resource and energy efficiency, Some progressRelevant RRP measures planned as of 2021 to 2026.SDG 7, 9, 13sustainable transport, reducing traffic congestion and Some progressRelevant RRP measures planned as of 2021 to 2025.SDG 11inclusive education and training.Some progressRelevant RRP measures planned as of 2021 to 2025.SDG 4, 8, 102020 CSR 1Some progressTakeallnecessarymeasures,inlinewiththegeneralescapeclauseoftheStabilityandGrowthPact,toeffectivelyaddresstheCOVID-19pandemic,sustaintheeconomyandsupporttheensuingrecovery.Wheneconomicconditionsallow,pursuefiscalpoliciesaimedatachievingprudentmedium-termfiscalpositionsandensuring debt sustainability, while enhancing investment. Not relevant anymoreNot applicableSDG 8, 16Strengthentheresilienceofthehealthsystemwithregardtothehealth workforce, critical medical products and primary care.Some progressRelevant RRP measures planned as of 2021 to 2026. SDG 32020 CSR 2Limited progressConsolidate short-time work arrangements and ensure the adequacy of unemployment protection for all workers. Some progressRelevant RRP measures planned as of 2022. SDG 1, 2, 8, 10Strengthenthequalityandinclusivenessofeducationandskillsdevelopment.Limited progressRelevant RRP measures planned as of 2021 to 2025.SDG 4, 8, 102020 CSR 3Some progressEnsureeffectiveimplementationofliquiditysupporttoaffectedbusinesses, including the self-employed. Substantial progressNot applicableSDG 8, 9Front-load mature public investment projects Substantial progressNot applicableSDG 8, 16and promote private investment to foster the economic recovery.Some progressNot applicableSDG 8, 9Focusinvestmentonthegreenanddigitaltransition,inparticularonclean and efficient production and use of energy, Some progressRelevant RRP measures planned as of 2021 to 2026. SDG 7, 9, 13waste management,Some progressRelevant RRP measures planned as of 2021 to 2025.SDG 11research and innovation.Limited progressRelevant RRP measures planned as of 2022 to 2026. SDG 6, 12, 15aswellasreinforceddigitalinfrastructuretoensuretheprovisionofessential services.Limited progressRelevant RRP measures planned as of 2021 to 2026. SDG 92020 CSR 4Some progressCompletereformsaddressingcurrentshortcomingsininstitutionalcapacity and governance to enhance judicial independence. Some progressRelevant RRP measures planned as of 2020 to 2026.SDG 16Continueeffortstoadequatelyassessandmitigatemoney-launderingrisksandtoensureeffectiveenforcementoftheanti-money-laundering framework. Substantial progressRelevant RRP measures planned as of 2022 to 2023.SDG 8, 16Stepupactiontoaddressfeaturesofthetaxsystemthatfacilitateaggressive tax planning by individuals and multinationals.Limited progressRelevant RRP measures planned as of 2022 to 2024. SDG 8, 16 
 
 
 
  
 
Table (continued) 

Note: 
* See footnote (31). 
** RRP measures included in this table contribute to the implementation of CSRs. Nevertheless, additional measures outside the 
RRP are necessary to fully implement CSRs and address their underlying challenges. Measures indicated as ‘being implemented’ 
are only those included in the RRF payment requests assessed by the European Commission.   
Source: European Commission. 

25 

2021 CSR 1Some progressIn2022,maintainasupportivefiscalstance,includingtheimpulseprovidedbytheRecoveryandResilienceFacility,andpreservenationally financed investment.Substantial progressNot applicableSDG 8, 16Wheneconomicconditionsallow,pursueafiscalpolicyaimedatachievingprudentmedium-termfiscalpositionsandensuringfiscalsustainability in the medium term.Some progressNot applicableSDG 8, 16At the same time, enhance investment to boost growth potential.Payparticularattentiontothecompositionofpublicfinances,onboththerevenueandexpendituresidesofthenationalbudget,andtothequalityofbudgetarymeasuresinordertoensureasustainableandinclusiverecovery.Prioritisesustainableandgrowth-enhancinginvestment,inparticularinvestmentsupportingthegreenanddigitaltransition.Some progressNot applicableSDG 8, 16Giveprioritytofiscalstructuralreformsthatwillhelpprovidefinancingforpublicpolicyprioritiesandcontributetothelong-termsustainabilityofpublicfinances,including,whererelevant,bystrengtheningthecoverage,adequacyandsustainabilityofhealthand social protection systems for all.Limited progressNot applicableSDG 8, 162022 CSR 1Some progressIn2023,ensurethatthegrowthofnationallyfinancedprimarycurrentexpenditureisinlinewithanoverallneutralpolicystance,takingintoaccountcontinuedtemporaryandtargetedsupporttohouseholdsandfirmsmostvulnerabletoenergypricehikesandtopeoplefleeingUkraine.Standreadytoadjustcurrentspendingtotheevolving situation.Substantial progressNot applicableSDG 8, 16Expandpublicinvestmentforthegreenanddigitaltransitions,andforenergysecuritytakingintoaccounttheREPowerEUinitiative,includingbymakinguseoftheRecoveryandResilienceFacilityandother Union funds.Limited progressNot applicableSDG 8, 16Fortheperiodbeyond2023,pursueafiscalpolicyaimedatachieving prudent medium-term fiscal positions.Some progressNot applicableSDG 8, 162022 CSR 2Proceedwiththeimplementationofitsrecoveryandresilienceplan,inlinewiththemilestonesandtargetsincludedintheCouncilImplementing Decision of 5 October 2021.Submitthe2021-2027cohesionpolicyprogrammingdocumentswithaviewtofinalisingtheirnegotiationswiththeCommissionandsubsequently starting their implementation.2022 CSR 3Limited progressTakeactiontoeffectivelyaddressfeaturesofthetaxsystemthatmayfacilitateaggressivetaxplanningbyindividualsandmultinationalcompanies,includingbyensuringsufficienttaxationofoutboundpaymentsofinterests,royalties,anddividends,andamending the rules for non-domiciled companies.Limited progressSDG 8, 162022 CSR 4Limited progressReduce overall reliance on fossil fuels.Some ProgressSDG 7, 9, 13Acceleratethedeploymentofrenewables,promotingandenablinginvestmentsinwindandsolarenergy,includinginfloatingoffshoreenergy,Limited ProgressSDG 7, 9, 13furtherupgradingMalta’selectricitytransmissionanddistributiongrids,andcreatingincentivesforelectricitystoragetosupplyfirm,flexible and fast-responding energy.Limited ProgressSDG 7, 9, 13Reduceenergydemandthroughimprovedenergyefficiency,particularly in residential buildings.Limited ProgressSDG 7Reduceemissionsfromroadtransportbyaddressingtrafficcongestionthroughimprovedservicequalityinpublictransport,intelligenttransportsystemsandinvestinginsoftmobilityinfrastructure.Limited ProgressSDG 11RRP implementation is monitored by assessing RRP payment requests and analysing reports published twice a year on the achievement of the milestones and targets. These are to be reflected in the country reports. Progress on the cohesion policy programming documents is monitored under the EU cohesion policy. 
 
  
 
ANNEX 3: RECOVERY AND RESILIENCE PLAN - OVERVIEW 

The  Recovery  and  Resilience  Facility  (RRF)  is 
the centrepiece of the EU’s efforts to help it 
recover  from  the  COVID-19  pandemic,  speed 
up  the  twin  transition  and  strengthen 
resilience  against  future  shocks.  The  RRF 
also  contributes  to  implementation  of  the 
SDGs  and  helps  to  address  the  Country 
Specific  Recommendations 
(see  Annex 4). 
Malta  submitted  its  initial  recovery  and  resilience 
plan  (RRP)  on  13 July 2021.  The  Commission’s 
positive  assessment  on  16 September 2021  and 
Council’s  approval  on  5 October 2021  paved  the 
way for disbursing EUR 316 million in grants under 
the RRF over the 2021-2026 period. 

Table A3.1: Key elements of the Maltese RRP('s) 

Source: European Commission  

Since  the  entry 
into  force  of  the  RRF 
Regulation  and  the  assessment  of  the 
national  recovery  and  resilience  plans, 
geopolitical  and  economic  developments 
have caused major disruptions across the EU. 
In  order  to  effectively  address  these  disruptions, 
the  (adjusted)  RRF  Regulation  allows  Member 
States to amend their recovery and resilience plan 
for  a  variety  of  reasons.  In  line  with  article  11(2) 
of the RRF, the maximum financial contribution for 
Malta was moreover updated on 30 June 2022 to 
an amount of EUR 258 million in grants.  

In this context, Malta submitted an amended 
RRP  to  the  Commission  on  26  April  2023  to 
take  account  of  the  revised  maximum  financial 
contribution,  in  line  with  Article  18  of  the  RRF 
Regulation  and  due  to  objective  circumstances 
that make it no longer possible to achieve  certain 
milestones  and  targets  in  the  RRP  in  line  with 
Article  21  of  the  RRF  Regulation.  To  cater  for  the 
revised maximum financial contribution, Malta has 

proposed to reduce the amount of one investment 
and  to  remove  three  investments  included  in  the 
initial  plan  related  to  the  ferry  landing  site,  the 
digitalisation of the outpatient facility in the main 
hospital,  and  the  Institute  for  Tourism  Studies 
campus.  In  line  with  Article  21  of  the  RRF 
Regulation, 
the 
investments 
renovation  of  private  sector  buildings  and  the 
uptake of electric vehicles are modified because of 
delays due to objective circumstances (e.g., in light 
of supply shortages). 

related 

two 

to 

include  a 

The  revised  RRP  includes  a  new  REPowerEU 
reforms  and 
chapter  with  additional 
investments.  These 
to 
reform 
accelerate  the  permitting  of  renewable  energy 
projects  and  to  introduce  an  obligation  to  install 
rooftop solar panels on certain new buildings. The 
revised  RRP  also  includes  an  investment  targeted 
at  upgrading  and  expanding  the  capacity  of 
Malta's  electricity  grid,  including  battery  storage 
solutions.  This  is  part  of  the  EU’s  efforts  to 
respond  to  the  economic  hardship  and  global 
energy  market  disruptions  caused  by  Russia’s 
invasion of Ukraine.   

Malta’s  progress  in  implementing  its  plan  is 
published  in  the  Recovery  and  Resilience 
Scoreboard (18).  The  Scoreboard  also  gives  an 
overview  of  the  progress  made  in  implementing 
the RRF as a whole, in a transparent manner. The 
graphs in this Annex show the current state of play 
of  the  milestones  and  targets  to  be  reached  by 
Malta and subsequently assessed as satisfactorily 
fulfilled by the Commission. 

EUR  93,43 million  has so  far  been  disbursed 
to  Malta  under  the  RRF.  The  Commission 
disbursed  EUR   41.1  million  to  Malta  in  pre-
financing  on  17  December  2021,  equivalent  to 
13% of the financial allocation.  

(18)  https://ec.europa.eu/economy_finance/recovery-and-

resilience-scoreboard/country_overview.html 

26 

Current RRPScope Initial planCID adoption date5 October 2021Total allocation EUR 316 million in grants (2.15% of 2021 GDP)Investments and reforms 17 investments and 30 reforms Total number of milestones and targets138 
 
 
  
 
 
                                                 
 
Graph A3.1: Total grants disbursed under the RRF 

investments,  a  national  anti-fraud  and  corruption 
strategy  and  reforms  to  digitalise  the  justice 
system. 

Graph A3.2: Fulfilment status of milestones and 
targets 

Note: This graph displays the amount of grants disbursed so 
far under the RRF. Grants are non-repayable financial 
contributions. The total amount of grants given to each 
Member State is determined by an allocation key and the 
total estimated cost of the respective RRP. 
Source: Recovery and Resilience Scoreboard 
https://ec.europa.eu/economy_finance/recovery-and-resilience-
scoreboard/index.html 

Malta’s first payment request was positively 
assessed  by  the  Commission,  taking  into 
account  the  opinion  of  the  Economic  and 
Financial  Committee,  leading  to  EUR  52.3 
million  being  disbursed  in  financial  support 
(net  of  pre-financing)  on  8 March   2023.  The 
related 19 milestones and targets cover important 
measures  such  as  the  adoption  of  a  strategy  to 
reduce waste through recycling in the construction 
sector,  the  establishment  of  office  facilities  to 
enable  civil  servants  to  work  remotely  across  the 
country,  reforms  to  boost  industrial  research  and 

Graph A3.3: Disbursements per pillar 

Note: This graph displays the share of satisfactorily fulfilled 
milestones and targets. A milestone or target is satisfactorily 
fulfilled once a Member State has provided evidence to the 
Commission that it has reached the milestone or target and 
the Commission has assessed it positively in an implementing 
decision. 
Source: Recovery and Resilience Scoreboard 
https://ec.europa.eu/economy_finance/recovery-and-resilience-
scoreboard/index.html 

Note: Each disbursement reflects progress in the implementation of the RRF, across the six policy pillars. This graph displays how 
disbursements under the RRF (excluding pre-financing) relate to the pillars. The amounts were calculated by linking the milestones 
and targets covered by a given disbursement to the pillar tagging (primary and secondary) of their respective measures. 
Source:  Recovery and Resilience Scoreboard: https://ec.europa.eu/economy_finance/recovery-and-resilience-
scoreboard/index.html 

27 

€ 93.43millionSatisfactorily fulfilledNot fulfilled0 mn5 mn10 mn15 mn20 mn25 mn30 mnGreen transitionDigitaltransformationSmart,sustainable andinclusive growthSocial andterritorialcohesionHealth, andeconomic, socialand institutionalresiliencePolicies for thenext generation 
   
 
   
   
ANNEX 4: OTHER EU INSTRUMENTS FOR RECOVERY AND GROWTH 

The  EU  budget  of  over  EUR  1.2  trillion  for 
2021-2027  is  geared  towards  implementing 
the  EU’s  main  priorities.  Cohesion  policy 
investment amounts to EUR 392 billion across the 
EU and represents almost a third of the overall EU 
budget, including around EUR 48 billion invested in 
line with REPowerEU objectives. 

Graph A4.1: Cohesion policy funds 2021-2027 in 
Malta: budget by fund 

quality  and  inclusiveness  of  education,  training, 
and  lifelong  learning  with  EUR  53.5  million,  and 
develop of digital skills with EUR 13.5 million. This 
funding  will  help  reduce  early  school  leaving  and 
address skills shortages through innovative digital 
teaching and learning tools, inclusive education for 
vulnerable  children,  and  education  and  lifelong 
learning  in  key  areas,  including  the  green  and 
digital economy. 

Of these investments, EUR 220 million will be 
invested  in  line  with  REPowerEU  objectives. 
This  is  on  top  of  the  EUR  26  million  dedicated  to 
REPowerEU under the 2014-2020 budget. EUR 10 
million  (2021-2027)  and  EUR  12  million  (2014-
2020)  is  for  improving  energy  efficiency;  EUR  10 
million  (2021-2027)  and  EUR  14  million  (2014-
2020)  is  for  renewable  energy  and  low-carbon 
R&I;  and  EUR  200  million  (2021-2027)  is  for 
smart energy systems. 

(1) million EUR in current prices, % of total; (total amount 
including EU and national co-financing) 
Source: European Commission, Cohesion Open Data 

Graph A4.2: Synergies between cohesion policy 
funds and the RRF with its six pillars in Malta 

It  will  also 

In  2021-2027,  in  Malta,  cohesion  policy 
funds (19)  will  invest  EUR  533  million  in  the 
green  transition  and  EUR  75  million  in  the 
digital  transformation  as  part  of  the 
country’s  total  allocation  of  EUR  1.2  billion. 
In  particular,  the  European  Regional  Development 
Fund (ERDF) will strengthen R&I, digitalisation and 
improve 
SMEs’  competitiveness. 
business  infrastructure  for  over  600  firms  and 
provide incubation services for 50 companies. 40% 
of  investments  in  the  green  transition  will  go 
towards  energy,  contributing  to  the  country’s 
energy  security  and  stability.  A  notable  project  is 
the  development  of  a 
second  electricity 
interconnector  to  Italy  in  the  form  of  a  high-
voltage  cable  running  under  the  sea.  The  Just 
Transition  Fund  will  focus  on  the  decarbonisation 
of  the  maritime  sector,  helping  to  alleviate  the 
social  and  economic  consequences  of 
the 
transition to climate neutrality. Actions will aim to 
improve 
the 
communities  living  in  the  affected  areas.  By 
providing  an  environmentally-friendly  alternative 
for  ships  while  berthing,  this  investment  will  help 
Malta  reduce  its  greenhouse  gas  emissions.  The 
European Social Fund Plus (ESF+) will enhance the 

the  health  and  wellbeing  of 

(19)  European Regional Development Fund (ERDF), European 
Social Fund+ (ESF+), Just Transition Fund (JTF). Interreg 
programmes are excluded. Total amount includes national 
and EU contributions. Data source: Cohesion Open Data.  

28 

(1) million EUR in current prices (CP funds: total amount, 
including EU and national co-financing)   
Source: European Commission  

In  2014-2020,  cohesion  policy  funds  made 
EUR  0.9  billion  available  to  Malta (20)  with  an 
absorption 
national 
financing,  the total  investment  amounts  to  EUR  1 
billion  -  representing  around  0.7%  of  GDP  for 
2014-2020.  

of  75% (21). 

Including 

Malta  continues  to  benefit  from  cohesion 
policy flexibility to support recovery, step up 
convergence  and  provide  vital  support  to 

(20)  Cohesion policy funds include the ERDF, CF, ESF and the 
Youth Employment Initiative (YEI). ETC programmes are 
excluded here. According to the ‘N+3 rule’, the funds 
committed for 2014-2020 must be spent by 2023. REACT-
EU is included in all figures. Data source: Cohesion Open 
Data. 

(21)  2014-2020 Cohesion policy EU payments by MS is updated 

daily on Cohesion Open Data.   

19416%76664%20517%333%CFERDFESF+JTF3114311134075165337596220130860100200300400500600Green transitionDigital transformationSmart, sustainableand inclusive growthSocial and territorialcohesionHealth, economic,social andinstitutional resiliencePolicies for the nextgenerationEU CP 2014-2020 (million EUR)EU CP 2021-2027 (million EUR) 
 
  
                                                 
   
                                                 
 
 
top  of 

regions  following  the  COVID-19  pandemic. 
The  Recovery  Assistance  for  Cohesion  and  the 
Territories  of  Europe  instrument  (REACT-EU) (22) 
under NextGenerationEU provides EUR 122 million 
on 
the  2014-2020  cohesion  policy 
allocation  for  Malta.  REACT-EU  will  finance 
infrastructure, 
investments 
equipment, 
for 
services 
resilience.  With  SAFE 
improving  healthcare 
(Supporting  Affordable  Energy),  the  2014-2020 
cohesion  policy  funds  may  also  be  mobilised  by 
Malta  to  support  vulnerable  households,  jobs  and 
companies  particularly  affected  by  high  energy 
prices.  

healthcare 
and 

technologies 

in 

Graph A4.3: Cohesion policy funds contribution to 
the SDGs in 2014-2020 and 2021-2027 in Malta 

(1) 5 largest contributions to SDGs in million (EUR) current 
prices 
Source: European Commission  

policy 

cohesion 

In  both  the  2014-2020  and  2021-2027 
periods, 
have 
contributed  substantially  to  the  Sustainable 
Development  Goals’ 
funds 
support  11  of  the  17  SDGs,  notably  SDG  7 
‘affordable  and  clean  energy’  and  SDG  8  ‘decent 
work and economic growth’ (23). 

(SDGs).  These 

funds 

Other  EU  funds  make  significant  resources 
available  for  Malta.  The  common  agricultural 
policy  (CAP)  made  EUR  149  million  available  in 
2014-2022,  and  will  continue  to  support  Malta 
with EUR 122 million in 2023-2027. The two CAP 
Funds  (European  Agricultural  Guarantee  Fund  and 
Rural 
European 
Development),  contribute  to  the  European  Green 

Agricultural 

Fund 

for 

Deal while ensuring long-term food security. They 
promote  social,  environmental  and  economic 
sustainability  and  innovation  in  agriculture  and 
rural  areas,  in  coordination  with  other  EU  Funds. 
The  European  Maritime  and  Fisheries  Fund  made 
EUR  23  million  available  to  Malta  in  2014-2020 
and 
the  European  Maritime,  Fisheries  and 
Aquaculture  Fund  will  make  available  EUR  22 
million in 2021-2027. 

Malta  also  benefits 
from  other  EU 
programmes,  notably  the  Connecting  Europe 
Facility,  which  under  CEF  2  (2021-2027)  has  so 
far  allocated  EU  funding  of  EUR  21.76  million  to 
one  specific  project  on  strategic 
transport 
networks.  Similarly,  Horizon  Europe  has  so  far 
allocated  nearly  EUR  19  million  to  Maltese  R&I 
actors,  while  Horizon  2020  earmarked  EUR  37 
million. The Public Sector Loan Facility established 
under  the  Just  Transition  Mechanism  makes  EUR 
1.8  million  of  grant  support  available  in  2021-
2027, which will be combined with EIB loans. 

for 

risks 

temporary 

unemployment 

support 
in 

Malta  received  support  under  the  European 
to 
instrument 
mitigate 
an 
emergency  (SURE)  to  finance  similar  measures 
to short-time work schemes to mitigate the impact 
of  COVID-19.  The  Council  granted  financial 
assistance  to  Malta  of  EUR  420  million  in  loans, 
which supported around 35% of workers and 42% 
of firms in 2020, and around 35% of workers and 
firms in 2021. 

Malta 

Instrument 
designing 

(TSI) 
The  Technical  Support 
and 
in 
supports 
implementing  growth-enhancing 
reforms, 
including  the  implementation  of  its  recovery 
and  resilience  plan  (RRP).  Malta  has  received 
significant  support  since  2017,  including  for:  the 
implementation of the Directive on Administrative 
Cooperation through measures targeting the more 
efficient  use  of  tax  data,  the  design  of  a 
the 
sustainable  aquaculture 
development  of  a  digital  strategy  for  the  justice 
sector (24).  

strategy,  and 

(22)  REACT-EU allocation on Cohesion Open Data. 

(23)  Other EU funds contribute to the implementation of the 
SDGs. In 2014-2022, this includes both the European 
Agricultural Fund for Rural Development (EARDF) and the 
European Maritime and Fisheries Fund (EMFF). 

(24)  Country factsheets on reform support are available here. 

29 

3310470243114261173144142117050100150200250300SDG 7 Affortableand clean energySDG 8 Decent workand economicgrowthSDG 3 Good healthand wellbeingSDG 9 Industry,innovation,infrastructureSDG 6 Clean waterand sanitationEU CP 2014-2020 (millions EUR)EU CP 2021-2027 (millions EUR) 
   
                                                 
                                                 
ANNEX 5: RESILIENCE 

illustrates  Malta’s 

This  Annex 
relative 
resilience capacities and vulnerabilities using 
the  Commission’s 
resilience  dashboards 
(RDB) (25).  Comprising  a  set  of  124  quantitative 
indicators,  the  RDB  provide  broad  indications  of 
Member  States’  ability  to  make  progress  across 
four interrelated dimensions: social and economic, 
green, digital, and geopolitical. The indicators show 
vulnerabilities (26)  and  capacities (27)  that  can 
become  increasingly  relevant,  both  to  navigate 
ongoing  transitions  and  to  cope  with  potential 
future shocks. To this end, the RDB help to identify 
areas  that  need  further  efforts  to  build  stronger 
and  more  resilient  economies  and  societies.  They 
in  Table  A5.1  as  synthetic 
are  summarised 
resilience 
illustrate  the  overall 
relative  situation  for  each  of  the  four  dimensions 
and  their  underlying  areas  for  Malta  and  the  EU-
27 (28). 

indices,  which 

medium  capacities  in  the  social  and  economic 
dimension,  and  medium-high  and  high  capacities 
in  the  digital  and  geopolitical  dimensions.  Malta 
shows stronger capacities than the EU average in 
the  areas  of  ‘value  chains  and  trade’,  ‘financial 
globalisation’  and  ‘digitalisation  for  industry  and 
for  personal  space’,  among  others.  Compared  to 
the  EU,  there  is  room  for  improving  capacities  in 
the  areas 
resources’, 
‘sustainable  use  of 
‘inequalities  and  social  impact  of  the  transitions’, 
‘ecosystems,  biodiversity,  sustainable  agriculture’ 
and ‘digitalisation for the public space’.  

Table A5.1: Resilience indices summarising the 
situation across RDB dimensions and areas 

in 

vulnerabilities 

and  medium-low 

According  to  the  set  of  resilience  indicators 
under  the  RDB,  Malta  generally  displays  a 
similar  level  of  vulnerabilities  compared  to 
the  EU  average.  Malta  shows  medium-high 
vulnerabilities in  the  green  dimension  of  the  RDB, 
the  geopolitical 
medium 
dimension, 
low 
and 
the  social  and  economic 
vulnerabilities 
dimension,  respectively  the  digital  dimension.  It 
has  higher  vulnerabilities  than  the  EU  average  in 
the areas of ‘raw material and energy supply’ and 
‘sustainable  use  of  resources’,  among  others. 
Malta has low vulnerabilities in relation to ‘health, 
education  and  work’,  ‘climate  change  mitigation 
and  adaptation’,  and  ‘digitalisation  for  personal 
space, industry and public space’. 

in 

Compared to the EU average, Malta shows a 
slightly  lower  level  of  capacities  across  all 
It  has  overall  medium-low 
RDB 
in  the  green  dimension, 
resilience  capacities 

indicators. 

Data are for 2021, and EU-27 refers to the value for the EU 
as a whole. Data underlying EU-27 vulnerabilities in the area 
‘value chains and trade’ are not available as they comprise 
partner concentration measures that are not comparable with 
Member States’ level values. 
Source: JRC Resilience Dashboards - European Commission 

(25)  For details see https://ec.europa.eu/info/strategy/strategic-
planning/strategic-foresight/2020-strategic-foresight-
report/resilience-dashboards_en; see also 2020 Strategic 
Foresight Report (COM(2020) 493). 

(26)  Vulnerabilities describe features that can exacerbate the 

negative impact of crises and transitions, or obstacles that 
may hinder the achievement of long-term strategic goals. 

(27)  Capacities refer to enablers or abilities to cope with crises 
and structural changes and to manage the transitions.  

(28)  This Annex is linked to Annex 1 on SDGs, Annex 6 on the 
green deal, Annex 8 on the fair transition to climate 
neutrality, Annex 9 on resource productivity, efficiency and 
circularity, Annex 10 on the digital transition and Annex 14 
on the European pillar of social rights. 

30 

MTEU-27MTEU-27Vulnerabilities IndexHighMedium-highMediumMedium-lowLowNot availableCapacities IndexHighMedium-highMediumMedium-lowLowNot availableDimension/AreaVulnerabilitiesCapacitiesSocial and economicHealth, education and workInequalities and social impact of the transitionsGreenEconomic & financial stability and sustainabilitySustainable use of resourcesClimate change mitigation & adaptationDigitalEcosystems, biodiversity, sustainable agricultureDigital for industryDigital for personal spaceCybersecurityDigital for public spaceRaw material and energy supplyGeopoliticalValue chains and tradeFinancial globalisationSecurity and demography 
 
                                                 
 
  
 
 
 
ENVIRONMENTAL SUSTAINABILITY 
ANNEX 6: EUROPEAN GREEN DEAL 

on 

several 

aspects 

Malta’s  green  transition  requires  continued 
action 
including 
renewable  energy  and  energy  efficiency, 
sustainable  transport,  and  water  and  waste 
management.  Implementation  of  the  European 
Green  Deal  is  underway  in  Malta;  this  Annex 
the  key  aspects 
provides  a  snapshot  of 
involved (29). 

Malta  has  not  yet  identified  measures  it 
needs  to  contain  greenhouse  gas  emissions 
in  the  effort  sharing  sectors (30).  Data  for 
2021  on  greenhouse  gas  emissions  in  these 
sectors  are  expected  to  show  Malta  generated 
its  annual  emission 
less 
considerably 
allocations (31).  Current  policies 
in  Malta  are 
expected to increase greenhouse gas emissions by 
50%  relative  to  2005  levels  in  2030,  while  its 
reduce 
effort  sharing 
emissions by 19% in 2030 (32). In its recovery and 
resilience  plan,  Malta  has  allocated  53.8 %  of  its 
Recovery  and  Resilience  Facility  grants  to  key 

requires 

target 

than 

to 

it 

(29)  The overview in this Annex is complemented by Annex 7 on 
energy security and affordability, Annex 8 on the fair 
transition to climate neutrality and environmental 
sustainability, Annex 9 on resource productivity, efficiency 
and circularity, Annex 11 on innovation, and Annex 19 on 
taxation. 

(30)  Member States’ greenhouse gas emission targets for 2030 
(‘effort sharing targets’) were increased by Regulation (EU) 
2023/857 (the Effort Sharing Regulation) amending 
Regulation (EU) 2018/842, aligning the action in the 
concerned sectors with the objective to reach EU-level, 
economy-wide greenhouse gas emission reductions of at 
least 55% relative to 1990 levels. The Regulation sets 
national targets for sectors outside the current EU Emissions 
Trading System, notably: buildings (heating and cooling), road 
transport, agriculture, waste, and small industry. Emissions 
covered by the EU ETS and the Effort Sharing Regulation are 
complemented by net removals in the land use sector, 
regulated by Regulation (EU) 2018/841 (the Land Use, Land 
Use Change and Forestry (LULUCF) Regulation) amended by 
Regulation (EU) 2023/839. 

(31)  Malta's annual emission allocations for 2022 were some 1.2 
Mt CO2eq, while its approximated emissions in 2020 were 
1.3 Mt (see European Commission, Accelerating the 
transition to climate neutrality for Europe’s security and 
prosperity: EU Climate Action Progress Report 2022, 
SWD(2022)343). 

(32)  See the information on the distance to the 2030 climate 

policy target in Graph A6.1. Existing and additional measures 
as of 15 March 2021. In late 2021, Malta adopted a low 
carbon development strategy, aimed to achieve emission 
reductions in line with its effort sharing target.  

31 

reforms  and 
objectives (33). 

investments 

to  attain  climate 

Graph A6.1: Thematic – greenhouse gas emissions 
from the effort sharing sectors in Mt CO2eq, 
2005-2021 

Source: European Environmental Agency. 

Malta has potential to boost the capacity of 
its  land  use  sector  to  achieve  net  carbon 
removals.  For  2030,  Malta’s  target  for  net 
removals  by  the  land  use,  land  use  change  and 
forestry  sector  (LULUCF)  implies  net  removals  of 
2 ktCO2eq (see Table A6.5). (34) Net removals have 
fallen since 2016, and then partially recovering in 
2021. 

Fossil fuels still play a strong role in Malta’s 
energy mix. In 2021, fossil fuels provided 92% of 
the  energy  mix,  of  which  natural  gas  provided 
42%  and  50%  came  from  oil  and  petroleum 
products.  Renewable  sources  accounted  for  8%. 
Fossil  fuels  also  made  up  the  bulk  of  Malta’s 
electricity mix in 2021 with gas providing 86%, oil 
and  petroleum  products  providing  2%  and 
renewables  providing  12%.  Malta´s  target  of 
11.5% of share of energy from renewable sources 
in  gross  final  energy  consumption  by  2030 
included in the NECP was considered unambitious 
in the 2020 assessment by the Commission. Malta 
will need to substantially strengthen its renewable 

(33)  For example, milestones and reforms that aim to promote 

climate neutrality (component 1) include projects on building 
stock renovation, energy efficiency and renewable energy. 
Component 2 on sustainable and decarbonised transport has 
projects on the promotion of clean and multimodal public 
transport and improving public road transport and includes 
the adoption and implementation of measures from the 
Sustainable Urban Mobility Plan (SUMP) for the Valletta 
Region.  

(34)  This value is indicative and will be updated in 2025 (as 

mandated by Regulation (EU) 2023/839). 

0.00.20.40.60.81.01.21.420052021Domestic transport (excl. aviation)Buildings (under ESR)AgricultureSmall industry 
 
 
                                                 
     
                                                 
 
 
energy  target  in  the  updated  NECP  to  reflect  the 
more  ambitious  EU  climate  and  energy  targets  in 
the Fit for 55 Package and in the REPowerEU Plan. 

Graph A6.2: Energy mix (top) and Electricity mix 
(bottom), 2021 

systems  in  buildings,  roads,  footpaths,  and  other 
public  spaces,  supporting  the  ‘power  up’  flagship 
initiative. These photovoltaic systems are designed 
to  feed  in  renewable  energy  for  street  lighting, 
pedestrian  crossings,  charging  points  for  electric 
cars  and  e-bikes,  USB  charging  points,  security 
cameras,  Wi-Fi  hotspots  and  other 
road 
technologies.  

national 

(NECP),  Malta’s 

Scaling  up  actions  on  energy  efficiency  will 
contribute  to  reducing  Malta´s  dependency 
on fossil fuels. In its national energy and climate 
indicative 
plan 
contribution  to  the  EU’s  energy  efficiency  targets 
towards  2030  is  also  low  compared  to  the  EU’s 
energy  efficiency  target  for  2030.  It  will  need  to 
increase its level of ambition in the updated NECP 
in  line  with  the  EU’s  higher  objectives  set  in  the 
REPowerEU  Plan  and  the  Fit  for  55  Package. (35) 
Malta’s  recovery  and  resilience  plan 
includes 
investments  in  the  renovation  of  a  number  of 
public  buildings,  public  schools  and  hospitals,  and 
the 
renovation  of  private  buildings.  Each 
renovation is expected to reduce direct and indirect 
greenhouse  gas  emissions  by  at  least  30%  and 
yield a reduction of greenhouse gas emissions by 
limiting  the  use  of  electricity  from  the  national 
grid.  

The  envisaged  ambitious  investments  and 
reforms  on  building  renovation  have  the 
potential  to  boost  job  creation  and  support 
the  development  of  green  skills  in  the 
renovation  and  construction  sector.  The 
investments  are  complemented  by  reforms  to 
in  the 
strengthen  the  regulatory  framework 
building  sector  and  ensure  a  sufficient  and 
diversified pool of professionals with the requisite 
expertise (by launching a training and certification 
programme).  The  reforms  and  investments  are 
also  complemented  by  schemes  and  financial 
instruments  supported  by  other  EU  funds  that 
target  residential  and  commercial  renovations, 
given  that  Malta’s  recovery  and  resilience  plan 
does  not  support  the  renovation  of  existing 
residential building stock. 

The  move  to  sustainable  mobility  remains  a 
significant  challenge 
Individual 
transport  (private  cars)  is  the  main  form  of 

in  Malta. 

(35)  After the conclusion of the negotiations for a recast EED, the 
ambition of both the EU and national targets as well as of 
the national measures for energy efficiency to meet these 
targets is expected to increase 

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: Eurosta 
Source:  

Malta has potential to accelerate the roll-out 
of  renewables,  especially  since  the  share  of 
renewables  in  energy  consumption  is  one  of 
the  lowest  in  the  EU.  The  only  form  of 
renewable  energy  in  the  12%  share  in  the 
electricity  mix  is  solar  photovoltaic.  Malta  has  no 
installed. 
wind  electricity  generation  capacity 
Neither onshore nor offshore wind energy projects 
are planned in Malta’s national energy and climate 
plan. Malta’s proposed investments in its recovery 
include  EUR 5  million  to 
and  resilience  plan 
promote  renewable  energy  generation  and  use  in 
buildings,  roads  and  public  spaces.  The  plan 
rooftop  photovoltaic 
in 
includes 

investments 

32 

86%2%12%GasOilRenewables42%50%8%GasOilRenewables 
   
                                                 
increasing  very  slowly 
in  sustainable 

transport.  Only  limited  safe  and  interconnected 
soft  mobility  infrastructure  exists,  and  Malta’s 
road network is inefficient. This causes congestion, 
greenhouse gas emissions, noise, and air pollution. 
In  2021,  domestic  transport  (without  aviation) 
provided  for  42 %  of  Malta’s  effort  sharing 
emissions,  against  the  EU  average  of  36 %.  The 
external costs of transport in Malta are estimated 
at EUR 400 million or about 3.6% of GDP per year 
and rising. The share of zero-emission vehicles, at 
0.8%, is lower than the EU average (1.2%), and it 
(see  Table  A6.1). 
is 
transport  are  a 
Investments 
significant  part  of  Malta’s  recovery  and  resilience 
plan  including  a  grant  and  scrappage  scheme 
encouraging 
the  purchase  of  zero-emission 
vehicles in the private sector, renewing the public-
sector  vehicle  fleet  with  zero-emission  electric 
vehicles,  and  the  purchase  of  zero-emission 
electric  buses  for  public  transport.  The  plan  sets 
transport 
out 
planning,  expand  the  use  of  public  transport,  and 
implement the measures set out in the sustainable 
urban mobility plan for Valletta. The reforms also 
regeneration  areas  and 
include  designating 
promoting remote working in the public sector. Air 
pollutant  emissions  are  no  longer  rising  in  step 
with  GDP,  but  NOx  and  PM10  emissions  are  still 
high.  

reforms  designed 

improve 

to 

Graph A6.3: Thematic – environmental investment 
needs and current investment, p.a. 2014-2020 

Source: European Commission. 

Malta  would  benefit  from  bridging  the 
investment  gap  on  the  circular  economy,  on 
preventing  and  reducing  pollution,  and  on 
water  management.  Between  2014  and  2020, 

33 

Malta’s  environmental  investment  needs (36)  were 
estimated to be EUR 129.7 million per year,  while 
Malta invested EUR 81.9 million per year, leaving a 
gap  of  EUR  47.8  million  per  year  (see  Graph 
A6.3) (37).  For  2021-2027,  Malta  needs  to  meet 
the needs stemming from the higher ambitions set 
in  the  EU’s  2030  biodiversity  strategy  and  meet 
the  financing  gaps  on  biodiversity  protection  and 
restoration,  which  are  estimated  at  EUR  25.9 
million  per  year.  It  needs  annual  investments  of 
EUR 39 million to reach the air emission-reduction 
requirements  in  the  National  Emission  Ceilings 
Directive,  EUR  4.9  million  to  promote  circularity 
and  waste  prevention,  and  EUR  9  million  for 
drinking  water  and  sanitation,  over  90%  of  which 
is for wastewater. 

Climate change poses many threats to Malta, 
a  small  island  state (38).  Malta’s  climate  action 
act  from  2015  sets  out  the  obligation  to  adopt 
regularly  update  a  national  adaptation 
and 
strategy.  Malta 
is  currently  carrying  out  a 
vulnerability  risk  assessment  which  will  identify 
the  key  economic  sectors  that  would  need 
adaptation action. (39). Of these, water sources and 
water  management  are  key (40);  other  sectors  at 
risk are infrastructure and transport, land use and 

(36)  Environmental objectives include pollution prevention and 

control, water management and industries, circular economy 
and waste, biodiversity and ecosystems (European 
Commission, 2022, Environmental Implementation Review, 
country report Malta) 

(37)  When also accounting for needs estimated at EU level only 

(e.g. water protection, higher circularity, biodiversity strategy).  

(38)  See Malta’s low-carbon development strategy, pp. 72 ff. The 
main climate change-driven threats are higher temperatures, 
change in precipitation patterns, sea level rise, acidification 
and warming. 

(39)  See Malta’s low carbon development strategy (above) and, 
more recently, the 8th National Communication of Malta to 
the UNFCCC:. 

(40)  Malta lacks rainfall in summer and exploitable surface 

waters. Groundwater is the only natural freshwater source 
available all year round, but its quality is being degraded due 
to nitrate pollution and sea water intrusion. Malta has 
desalinated sea water to provide drinking water since the 
1980s. Also see European Environment Agency, Europe’s 
groundwater - a key resource under pressure, and L. Hartfiel, 
M. Soupir and R. S. Kanwar, Malta’s water scarcity challenges: 
past, present, and future mitigation strategies for 
sustainable water supplies, 24 November 2020. In 2018, 
Malta’s rate of soil sealing was 19.4% of its total land area 
(European Environment Agency, Soil sealing and ecosystem 
impacts). Malta ranks worst in the EU for land take, with net 
land take of 485.8 m2 per km2 (EU-27 average: 83.8 m2 
/km2) (European Commission, 2022, Environmental 
Implementation Review, country report Malta).  

31229325332166460.010.020.030.040.050.060.070.0Pollutionprevention andcontrolWater (industries,excl. protection)Circular economy(incl. waste)Biodiversity andecosystemsR&I&D and otherEUR million (at current prices)Current investmentTotal need 
       
                                                 
buildings,  natural  ecosystems  and  agriculture (41), 
fisheries,  health  and  civil  protection,  and  tourism. 
Malta has planned adaptation measures for these 
sectors (42). 

fuel  and  other 
fossil 
Malta  provides 
environmentally harmful subsidies that could 
be  considered  for  reform,  while  ensuring 
food  and  energy  security  and  mitigating 
social  effects.  Fossil  fuel  subsidies  in  Malta 
amounted  to  EUR  22  million  in  2020,  a  151% 
increase  since  2015,  which  puts  low  carbon 
alternatives  at  a  disadvantage.  Environmentally 
harmful  subsidies  have  been  identified,  via  an 
initial  assessment,  in the agriculture,  forestry  and 
fishing, electricity, gas, steam and air conditioning, 
mining  and  quarrying,  and  professional,  technical 
and  scientific  sectors (43).  A  mapping  of  all 
environmentally harmful subsidies by Malta would 
help prioritise candidates for reform. 

(41)  Climate change entails many risks to agriculture and 

ecosystems. Sea level rise may increase the concentration of 
salt and negatively affect other soil parameters. Soil erosion 
reduces carbon stocks and carbon sequestration in soils. 
Higher temperatures are exacerbating biodiversity loss, 
ecosystem and habitat loss. The increase in demand for 
water for agriculture exerts pressure on tight water supply.  

(42)  For water management, these measures include surveying 
the status of rainwater harvesting infrastructure and users; 
effective enforcement of legislation mandating rainwater 
capture reservoirs or wells; increasing incentives to help 
farmers and landowners increase the presence and use of 
reservoirs; a comprehensive study of the current hydrological 
cycle monitoring capacity and new hydrological data 
modelling and management. For agriculture and ecosystems, 
the measures include promoting the use of EU funds as a 
complement to national and private-sector funding and 
initiatives to adopt innovative technologies. 

(43)  Fossil fuel figures in EUR of 2021 from the 2022 State of 

the Energy Union report. Initial assessment of 
environmentally harmful subsidies done by the Commission 
in the 2022 toolbox for reforming environmentally harmful 
subsidies in Europe, using OECD definitions, and based on the 
following datasets: OECD Agriculture Policy Monitoring and 
Evaluations; OECD Policy Instruments for the Environment 
(PINE) Database; OECD Statistical Database for Fossil Fuels 
Support; IMF country-level energy subsidy estimates. Annex 4 
of the toolbox contains detailed examples of subsidies on 
the candidates for reform. 

34 

 
                                                 
Table A6.1: Indicators tracking progress on the European Green Deal from a macroeconomic perspective 

Sources: (1) Historical and projected emissions, as well as Member States’ climate policy targets and 2005 base year emissions 
under the Effort Sharing Decision (for 2020) are measured in global warming potential (GWP) values from the 4th Assessment 
Report (AR4) of the Intergovernmental Panel on Climate Change (IPCC). Member States’ climate policy targets and 2005 base 
year emissions under the Effort Sharing Regulation (for 2030) are in GWP values from the 5th Assessment Report (AR5). The 
table above shows the base year emissions 2005 under the Effort Sharing Decision, using AR4 GWP values. Emissions for 2017-
2021 are expressed in percentage change from 2005 base year emissions, with AR4 GWP values. 2021 data are preliminary. The 
table shows the 2030 target under Regulation (EU) 2023/857 that aligns it with the EU’s 55% objective, in percentage change 
from 2005 base year emissions (AR5 GWP). Distance to target is the gap between Member States’ 2030 target (with AR5 GWP 
values) and projected emissions with existing measures (WEM) and with additional measures (WAM) (with AR4 GWP values), in 
percentage change from the 2005 base year emissions. Due to the difference in global warming potential values, the distance to 
target is only illustrative. The measures included reflect the state of play as of 15 March 2021.  
(2) Net removals are expressed in negative figures, net emissions in positive figures. Reported data are from the 2023 
greenhouse gas inventory submission. 2030 value of net greenhouse gas removals as in Regulation (EU) 2023/839 
amending Regulation (EU) 2018/841 (LULUCF Regulation) – Annex IIa, kilotons of CO2 equivalent, based on 2020 submissions. 
(3) Renewable energy and energy efficiency targets and national contributions are in line with the methodology established under 
Regulation (EU) 2018/1999 (Governance Regulation).  
(4) Percentage of total revenue from taxes and social contributions (excluding imputed social contributions). Revenue from the EU 
Emissions Trading System is included in environmental tax revenue.  
(5) Expenditure on gross fixed capital formation for the production of environmental protection services (abatement and 
prevention of pollution) covering government, industry, and specialised providers.  
(6) European Commission, Study on energy subsidies and other government interventions in the European Union, 2022 edition.  
(7) The climate protection gap refers to the share of non-insured economic losses caused by climate-related disasters. This 
indicator is based on modelling of the current risk from floods, wildfires and windstorms as well as earthquakes, and an 
estimation of the current insurance penetration rate. The indicator does not provide information on the split between the 
private/public costs of climate-related disasters. A score of 0 means no protection gap, while a score of 4 corresponds to a very 
high gap (EIOPA, 2022).  
(8) Sulphur oxides (SO2 equivalent), ammonia, particulates < 10 µm, nitrogen oxides in total economy (divided by GDP).  
(9) Battery electric vehicles (BEV) and fuel cell electric vehicles (FCEV). 

35 

2030200520172018201920202021target/valueWEMWAMGreenhouse gas emission reductions in effort sharing sectors (1)Mt CO2eq; %; pp1.128%24%28%17%--19%-69-69Net carbon removals from LULUCF (2)kt CO2eq0106812n/an/a200520172018201920202021Share of energy from renewable sources in gross final consumption of energy (3)%0%7%8%8%11%12%12%Energy efficiency: primary energy consumption (3)Mtoe0.90.80.80.90.70.81.1Energy efficiency: final energy consumption (3)Mtoe0.50.60.70.70.50.60.8201620172018201920202021201920202021Environmental taxes (% of GDP)% of GDP2.62.52.52.42.31.92.352.232.24Environmental taxes (% of total taxation) (4)% of taxation 8.68.48.28.37.76.55.895.575.52Government expenditure on environmental protection% of total exp.2.92.83.83.43.13.01.701.611.6Investment in environmental protection (5) % of GDP0.10.10.20.2--0.40.40.4Fossil fuel subsidies (6)EUR2021bn0.00.00.00.00.0-53.050.0-Climate protection gap (7) score 1-42.31.41.5Net greenhouse gas emissions1990 = 10091.089.090.096.081.084.076.069.072.0Greenhouse gas emission intensity of the economykg/EUR'100.250.240.240.240.21-0.310.300.26Energy intensity of the economykgoe/EUR'100.080.080.080.080.07-0.110.11-Final energy consumption (FEC)2015=100100.0106.9113.8120.794.8101.7102.994.6-FEC in residential building sector2015=10097.1114.1120.0130.4134.5148.7101.3101.3106.8FEC in services building sector2015=10097.8106.1100.1106.096.8103.0100.194.4100.7Smog-precursor emission intensity (to GDP) (8)tonne/EUR'100.90.70.60.60.6-0.90.9-Years of life lost due to air pollution by PM2.5per 100.000 inh.412.5438.4499.1465.4337.8-581.6544.5-Years of life lost due to air pollution by NO2per 100.000 inh.87.0103.032.038.526.4-309.6218.8-Nitrates in ground watermg NO3/litre59.960.053.459.459.4-21.020.8-Land protected areas% of total26.628.2-28.728.729.026.226.426.4Marine protected areas% of total4.6--5.5-5.510.7-12.1Organic farming% of total utilised agricultural area0.20.40.40.50.60.68.59.1-201720182019202020212021202020212022Share of zero-emission vehicles (9)% in new registrations0.41.42.31.21.51.95.48.910.7Number of AC/DC recharging points (AFIR categorisation)---1009897188626330028432518Share of electrified railways%------56.6n/a56.6Hours of congestion per commuting driver per year80.579.083.582.2n/an/a28.7n/an/aMobilityFiscal and financialindicatorsEnergyPollutionBiodiversityClimate'Fit for 55'DistanceProgress to policy targetsNational contribution to 2030 EU targetMaltaEU 
 
     
 
ANNEX 7: ENERGY SECURITY AND AFFORDABILITY 

Before  Russia  invaded  Ukraine,  Malta  had 
limited  exposure  to  Russian  gas. 
very 
However,  it  is  highly  dependent  on  imported 
fossil  fuels  in  general.  It  uses  more  gas  in 
electricity  production  (86%)  than  any  other 
Member  State (44).  This  makes  Malta’s  economy 
particularly sensitive to global price developments, 
requiring  it  to  step  up  efforts  on  the  energy 
transition.  This  Annex (45)  sets  out  actions  carried 
out by Malta to achieve the REPowerEU objectives, 
including  through  the 
its 
recovery  and  resilience  plan,  in  order  to  improve 
affordability  while 
energy 
accelerating  the  clean  energy  transition,  and 
contributing to enhancing the EU’s competitiveness 
in the clean energy sector (46).   

implementation  of 

security 

and 

(LNG) 

liquefied  natural  gas 

Malta has a high level of gas supply security. 
Since  2017, 
is 
imported  through  an  LNG facility  consisting  of  an 
LNG  floating  storage  unit  and  an  onshore 
regasification  unit  on  the  Delimara  site (47),  both 
operational  since  2017.  Natural  gas  in  Malta  is 
used  solely  to  generate  electricity,  with  the  only 
source  of  natural  gas  being  imported  LNG.  The 
capacity of the LNG terminal is fully contracted to 
supply  natural  gas  to  two  electricity  generation 
plants.  No  action  is  required  to  secure  access  to 
additional LNG cargoes, because Malta has an LNG 
supply contract that runs until August 2026 (48). It 
would typically experience peak energy demand in 
summer (the cooling season), not winter.   

The  security  of  supply  of  the  gas  and 
electricity  systems  are  closely  interlinked 
given  Malta’s  high  dependency  on  gas  to 
produce  electricity.  It  imports  approximately 

(44)  The Member State with the next highest share of gas is 47% 

(45)  It is complemented by Annex 6 as the European Green Deal 
focuses on the clean energy transition, by Annex 8 on the 
actions taken to mitigate energy poverty and protect the 
most vulnerable ones, by Annex 9 as the transition to a 
circular economy will unlock significant energy and resource 
savings, further strengthening energy security and 
affordability, and by Annex 12 on industry and single market 
complementing ongoing efforts under the European Green 
Deal and REPowerEU. 

(46)  in line with the Green Deal Industrial Plan COM(2023) 62 
final, and the proposed Net-Zero Industry Act COM(2023) 
161 final 

(47)  The floating storage unit has an LNG storage capacity of 
125 000 m3 and the regasification plant has a maximum 
natural gas output rate of 89 000 Nm3/hr of natural gas. 

(48)  Malta imports LNG delivered by tanker vessels which is 
usually sourced from [North and central America]. 

20% of its electricity from Italy, in turn dependent 
on Russia for 43% of its gas (49). The demand for 
natural  gas  to  generate  electricity  for  the  next  4 
years  is  forecast  to  remain  stable.  Malta  has  put 
some demand reduction measures in place. It has 
implemented energy saving initiatives in the public 
sector,  energy  audits  of  companies,  energy 
efficiency  schemes  for  industry,  and  renewable 
energy schemes for the residential sector. No gas 
is  used  in  industry,  services,  or  agri-horticultural 
sectors.  Malta  has  experienced  a  gas  demand 
increase  of  about  13%  over  the  period  August 
2022  –  March  2023  when  compared  to  the 
previous 5-years average (50). 

itself 

It  has  committed 

Malta is relatively well interconnected to its 
neighbours  in  terms  of  electricity.  It  has 
reported progress on studies and permits required 
to  develop  the  second  Malta-Italy  electricity 
interconnector,  an  investment  of  EUR  280  million, 
including  a  contribution  of EUR  165  million  from 
Cohesion  Policy,  aimed  at  making  Malta’s  supply 
more  secure  while  providing  spare  capacity  and 
resilience  so  Malta  can  handle  fluctuations  in 
supply  from  existing  and  future  wind  and  solar 
energy  sources. 
to 
investing EUR 80 million in upgrading its land grid 
to  facilitate  the  accommodation  of  additional 
In  the  2023  draft 
quantities  of  renewables. 
budget,  EUR  14  million  have  been  earmarked  for 
modernising  the  electricity  grid.  Investments  in 
grid  modernisation  and  energy  storage  solutions 
are  on  the  horizon.  There  is  room  to  improve  the 
grids  to  integrate  renewables  and  make  the 
energy  system  more  efficient  to  avoid  energy 
losses. On cross-border gas projects, Malta intends 
to  build  a  hydrogen-ready  gas  pipeline  between 
Italy  and  Malta.  Nevertheless,  Malta  already  has 
installed  a  floating  storage  unit  with  onshore 
regassification,  which  secures  already  its  gas 
supply.  Malta  does  not  have  any  domestic  gas 
distribution  networks,  or  any  district  heating 
networks and there are no end-use gas customers 
apart  from  two  electricity  producers  at  the 
Delimara Power Station. 

taken 

To  address  increasing  energy  prices,  Malta 
untargeted, 
has 
but 
measures 
to  protect  households  and 
businesses  and  kept  retail  prices  stable. 

vigorous, 

(49)  If electricity cannot be imported from Italy because gas is in 
short supply there, a supply of diesel would last 14 days on 
average.  

(50)  Malta benefits from an exemption to Regulation 2022/1369. 

36 

 
 
                                                 
                                                 
 
 
interest.   

of 

net 

expenditure, 

During  2022, 
retail  electricity  prices  were 
maintained  at  pre-crisis  levels,  fully  shielding  its 
households  and  businesses  from  the  market’s 
soaring  energy  prices.  The  2023  budget  plans  to 
maintain  its  energy  and  fuel  price  stability  policy 
throughout  2023.  The  2023  budget  support  for 
energy and fuel prices is forecasted to reach EUR 
607 million in 2023, amounting to 9.3% of current 
government 
Targeting  measures  to  low-income  households 
would  help  ensure  the  long-term  sustainability  of 
such  support.    Furthermore,  without  mechanisms 
limit  the  amount  of  energy  consumption 
to 
covered,  such  universal  below-cost  tariffs  may 
lessen incentives to reduce energy demand. Malta 
also  gives  households  and  small  and  medium-
sized  enterprises  free  professional  advice  on 
energy-efficient  appliances  and  behaviour  and 
offers  support  schemes  to  promote  photovoltaic 
(PV) 
installations  and  battery  storage.  For 
vulnerable  households  and  to  address  energy 
poverty,  this  support 
is  complemented  by  a 
financial  scheme  designed  to  replace  old  and 
inefficient household appliances (Annex 8). 

Graph A7.1: Malta´s retail energy prices for 
industry (top) and households (bottom) 

(1) On electricity, the band consumption is DC for households 
and ID for industry 
(2) On gas, the band consumption is D2 for households and I4 
for industry 
Source: Eurostat 

Challenging  though  it  is,  the  government’s 
commitment to adopting offshore renewable 

37 

itself 

energy  technologies  is  a  major  policy  shift.  
implementation  phase  of  such  offshore 
The 
energy projects in Malta’s exclusive economic zone 
is  expected  to  start  in  2023 (51).  The  share  of 
electricity  generated  by  renewable  sources  has 
increased  from  7.5%  in  2019  to  almost  9.5%  in 
2020,  mainly  driven  by  solar  PV (52).  Malta  has 
committed 
to  addressing  permitting 
bottlenecks for the installation of PV panels on the 
rooftops  of  building  blocks  by  making  them 
compulsory  to  install  them  on  specific  buildings 
and  providing  increased  financial  incentives  to 
house owners for residential solar PV with the aim 
of  installing  8-9  MW  of  solar  PV  per  year.  Malta 
has  two  support  schemes:  a  feed-in  tariff  for 
smaller  PV  installations,  and  another  scheme  for 
larger  RES  systems  (>40kWp)  which  is  being 
changed  to  a  two-sided  feed-in  premium. (53). 
Malta  is  incentivising  the  onshore  deployment  of 
renewables (solar panels, solar water heaters, heat 
pumps) through grants for households. It produces 
200  MW  of  renewables  a  year.  Smart meters  are 
fully  deployed,  and  the  Maltese  authorities  are 
starting to support energy storage in households. 

to  significantly  contribute 

the 
Energy  efficiency  measures  have 
potential 
to 
energy security and affordability in Malta. In 
Malta,  there  are  no  district  heating  systems. 
Heating demand is satisfied primarily by means of 
LPG  cylinders  (also  used  by  households  for 
cooking),  with  some  gas  oil  and  fuel  oil  used  by 
the industrial and services sectors. Malta has also 
registered a large increase in the number of air-to-
air heat pumps to meet heating and cooling needs 
across  all  end-use  sectors  without  any  public 
support  or  policy  intervention.  Regarding  market 

(51)  According to the Global Wind Energy Council, Malta has an 
estimated technical potential for offshore wind in terms of 
installed power capacity of 25 GW of floating solar energy 
within 200 kilometres of the shoreline.  

(52)  https://data.europa.eu/doi/10.2833/12592 

(53)  Feed-in tariffs to promote the purchase of PV systems are 

made available to both residential and commercial systems. 
In 2021 Malta’s solar PV capacity reached around 205-
megawatt peak (MWp). From 2021 on, competitive bidding 
was extended to all schemes providing support for 
renewable installations with a capacity of at least 40 kW, 
making it possible for a wider range of installations to 
compete for a tariff above the administratively set tariff. Of 
1252 beneficiaries of the solar PV grant scheme in 2021, 78 
also availed of a battery storage scheme to install a battery 
storage system. In 2021, the gross electricity production in 
Malta from solar panels was 256 GWh, significantly 
offsetting electricity produced from fossil fuels. Based on a 
five-year average from 2017 to 2021, Malta installs 
approximately 23 MWp of solar PV capacity per year. 

050100150200250€/MWhElectricity MaltaElectricity EU050100150200250300€/MWhElectricity MaltaElectricity EU 
     
                                                 
surveillance  activities,  Malta  is  carrying  out  a  low 
number  of  checks  on  products  covered  by  eco-
design and energy labelling. This implies concerns 
as  to  the  compliance  levels  of  the  concerned 
products,  and  therefore  possible  missed  energy 
and CO2 savings (54). 

Malta  invests  very  little  in  research  and 
innovation  (R&I)  to  support  Energy  Union 
priorities.  Public  R&I  investments (55)  decreased 
from  EUR  0.4  million  in  2018  (equivalent  to  a 
0.003% share of GDP) to EUR 0.3 million in 2019 
(or  a  0.002%  share  of  GDP).  At  the  same  time, 
private R&I investments (56) were EUR 3.2 and 3.8 
million respectively. The number of patent families 
filed  in  2019  for  clean  technologies  was  2 (57), 
representing around 3.4 patent families per million 
inhabitants.  This  is  six  times  less  than  the  EU 
average. Malta is lagging behind in the production 
of  renewable  technologies.  For  instance,  it  is 
importing new technologies it is installing, such as 
heat pumps, solar panels and batteries, without a 
specific  plan  to  promote  producing  some  onsite. 
This is even though Malta has in place a national 
strategy for research and innovation in energy and 
water. (58) 

(54)  The internet-supported information and communication 
system for the pan-European market surveillance 

(55)  JRC SETIS (2022), 

https://setis.ec.europa.eu/publications/setis-research-and-
innovation-data_en, where the figures do not include EU 
funding. 

(56)  Idem. 

(57)  Ibidem. 

(58)  https://www.energywateragency.gov.mt/wp-

content/uploads/2020/07/National-Strategy-for-Research-
and-Innovation-in-Energy-and-Water-2021-2030-EWA-
web.pdf 

38 

 
                                                 
Table A7.1: Key energy indicators 

(1) The ranking of the main supliers is based on the latest available figures (for 2021) 
(2) FSRU included 
(3) Venture Capital investments include Venture Capital deals (all stages) and Private Equity Growth/Expansion deals (for 
companies that have previously been part of the portfolio of a VC investment firm). 

Source: Eurostat, Gas Infrastructure Europe (Storage and LNG Transparency Platform), JRC SETIS (2022), JRC elaboration based 
on PitchBook data (06/2022) 

39 

EU20182019202020212018201920202021Import Dependency [%] 98%97%98%97%58%61%57%56%of Solid fossil fuels 0%0%0%0%44%44%36%37%of Oil and petroleum products 97%98%99%98%95%97%97%92%of Natural Gas 109%104%96%103%83%90%84%83%Dependency from Russian Fossil Fuels [%]of Hard Coal----40%44%49%47%of Crude Oil----30%27%26%25%of Natural Gas 0%0%0%0%40%40%38%41%20152016201720182019202020212022Gross Electricity Production (GWh)1,3058571,6521,9622,0602,1432,215-Combustible Fuels1,2107291,4891,7721,8641,9061,959-Nuclear0000000-Hydro0000000-Wind0000000-Solar 95128162190195237256-Geothermal 0000000-Other Sources0000000-Net Imports of Electricity (GWh)1,0541,527861621636416511-   As a % of electricity available for final consumption 50%72%37%26%26%18%20% -Electricity Interconnection (%)--24.20%29.41%29.0%31.0%44.5%42.3%20152016201720182019202020212022*Gas Consumption (in bcm)0.00.00.30.30.40.40.40.4Gas Imports - by type (in bcm)0.00.00.60.80.80.70.8-Gas imports - pipeline0.00.00.30.40.40.40.4-Gas imports - LNG0.00.00.30.40.40.40.4-Gas Imports - by main source supplier (in bcm) (1)Trinidad and Tobago0.00.00.40.30.60.60.5-United States0.00.00.00.10.00.10.3-Equatorial Guinea0.00.00.10.10.00.00.0-Egypt0.00.00.00.00.10.00.0-Others0.00.00.00.20.00.00.0-2019202020212022LNG TerminalsNumber of LNG Terminals (2)1111LNG Storage capacity (m3 LNG)125,000125,000125,000125,000Underground StorageNumber of storage facilities0000Operational Storage Capacity (bcm)00002019202020212022VC investments in climate tech start-ups and scale-ups (EUR Mln) (3)as a % of total VC investments in Maltan.a.n.a.n.a.n.a.Research & Innovation spending in Energy Union R&i priorites (2)Public R&I (EUR mln)0.30.1n.a.n.a.Public R&I (% GDP)0.002%0.001%n.a.n.a.Private R&I (EUR mln)3.8n.a.n.a.n.a.Private R&I (% GDP)0.03%n.a.n.a.n.a.MALTAENERGY DEPENDENCEDIVERSIFICATION OF GAS SUPPLIESCLEAN ENERGYELECTRICITY 
 
 
 
 
     
 
 
 
ANNEX 8: FAIR TRANSITION TO CLIMATE NEUTRALITY 

This  Annex  monitors  Malta’s  progress  in 
ensuring  a  fair  transition  towards  climate 
neutrality  and  environmental  sustainability, 
notably  for  workers  and  households 
in 
vulnerable  situations.  The  number  of  jobs  in 
Malta’s  green  economy  has  risen  quickly.  To 
ensure  a  fair  green  transition  in  line  with  the 
Council Recommendation (59), Malta’s recovery and 
resilience  plan  (RRP) (60)  outlines  reforms  and 
investments  including  the  renovation  of  public 
buildings 
schools, 
such  as  hospitals  and 
decarbonisation of and enhanced access to public 
transport,  support  for  purchasing  zero-emission 
electric  vehicles  in  the  private  sector  and  the 
development  of  green  skills  in  the  construction 
sector.  This  helps  support  the  implementation  of 
just 
REPowerEU,  complements 
transition  plans  and  actions  supported  by  the 
European Social Fund Plus (ESF+). 

territorial 

the 

Employment in Malta’s sectors most affected 
by  the  green  transition  declined,  although 
the  green  economy 
is  expanding.  The 
greenhouse  gas  (GHG)  emissions  intensity  of 
Malta’s workforce fell from 10.6 to 7.5 tonnes per 
worker  between  2015  and  2021,  which  is  below 
the  EU  average  of  13.7  in  2021  (see  Graph A8.1 
and  Table A8.1).  Employment  in  Malta’s  energy-
intensive industries (EII) represented 1.3% of total 
employment  in  2020,  down  from  1.3%  in  2015 
and well below the EU average of 3.0%. The total 
number  of  jobs  in  the  environmental  goods  and 
services sector grew by 18.6% (to 4 013) in 2015-
2019 
total 
employment (below the EU average of 2.2%) (see 
Annex 9 for circular jobs specifically). However, the 
job  vacancy  rate  in  construction,  which  is  key  for 
the  green  transition,  is  relatively  low  (3.1%  vs 
4.0% in the EU) (61). Measures under the RRP, such 
as  the  introduction  of  a  skills  certificate  for  the 
construction  industry  help  overcoming  existing 
skills shortages. 

reaching  1.6%  of 

(EU:  8.3%), 

Upskilling  and  reskilling  in  declining  and 
transforming  sectors  are  key  to  tackling 
labour  shortages.  Skills  are  key  for  smooth 
labour  market  transitions  and  preserving  jobs  in 

(59)  Council Recommendation of 16 June 2022 on ensuring a fair 
transition towards climate neutrality (2022/C 243/04) covers 
employment, skills, tax-benefit and social protection 
systems, essential services and housing. 

transforming  sectors.  In  Malta,  only  20%  of 
citizens  believe  they  do  not  have  the  necessary 
skills  to  contribute  to  the  green  transition  (EU: 
38%) (62).  Specific  measures  under  the  Just 
Transition  Mechanism  provide  training  to  help 
reskill workers affected by the transition, together 
with a broader training offer at national level and 
flexibility  mechanisms  to  encourage  in-company 
funding 
In  Malta,  2.3%  of  ESF+ 
training. 
contributes  to  green  skills  and  jobs.  Several 
programmes  co-financed  by  the  ESF+  provide 
training  and  professional  guidance  for  vulnerable 
people  as  well  as  lifelong  learning  measures  to 
step up the creation of green and related jobs. 

Graph A8.1: Fair transition challenges in Malta 

Source: Eurostat, EMPL-JRC GD-AMEDI/AMEDI+ projects and 
World Inequality Database (see Table A8.1). 

In  Malta,  residential  energy  and  transport 
fuel  prices  have  not  increased  recently  due 
to government-regulated retail prices. Amidst 
the  energy  crisis, 
the  Maltese  government 
maintained a freeze on energy and fuel prices that 
had  been  in  place  since  the  outbreak  of  the 
COVID-19 pandemic in 2020, sparing business and 
households  the  inflationary  surge  seen  in  other 
Member  States.  Consequently,  the  effects  of  the 
energy  crisis  on  poverty  including  energy  poverty 
and  distributional  effects  related  to  changes  of 
gas and electricity, as well as transport fuel prices, 
are minimal or absent. 

Energy  poverty  indicators  have  improved  in 
recent  years.  The  share  of  the  total  population 
unable  to  keep  their  homes  adequately  warm  fell 

(60)  See 2022 Country Report (Annex 6). 

(61)  Eurostat (JVS_A_RATE_R2) 

(62)  Special Eurobarometer 527. Fairness perceptions of the 

green transition (May – June 2022). 
https://europa.eu/eurobarometer/surveys/detail/2672 

40 

00.20.40.60.811.21.41.61.82GHG per workerEmployment EIIEnergy povertyTransportpoverty(proxy)CarboninequalityEU LatestMT Latest (vs EU Latest)MT 2015 (vs EU Latest) 
 
                                                 
   
                                                 
 
Table A8.1: Key indicators for a fair transition in Malta 

Source: Eurostat (env_ac_ainah_r2, nama_10_a64_e, ilc_mdes01), EU Labour Force Survey (break in time series in 2021), EMPL-
JRC GD-AMEDI/AMEDI+ projects and World Inequality Database (WID). 

from  14.1%  in  2015  to  7.8%  in  2021 (63).  In 
particular,  18.6%  of  the  population  at  risk  of 
poverty (AROP) was affected in 2021 (EU: 16.4%), 
as were 7.8% of lower middle-income households 
(in deciles 4-5) (EU: 8.2%). Before the energy price 
hikes,  an  estimated  2.6%  of  the  total  population 
and  9.8%  of  the  (expenditure-based)  at-risk-of-
residential 
(AROP)  population  had 
poverty 
expenditure  budget  shares  on  electricity,  gas  and 
other  fuels (64)  above  10%  of  their  household 
budget. These shares are, however, still much less 
than  the  estimated  EU  averages  of  26.9%  and 
48.2%, respectively.  

Households’  budgets  were  not  affected  by 
energy prices, given their stability. As a result 
of energy price changes during the August 2021 to 
January  2023  period  relative  to  the  18  months 
prior (cf. Annex 7), the fraction of individuals living 
in households which spend more than 10% of their 
budget  on  energy  has  remained  stable  for  the 
whole  population  and  for  the  (expenditure-based) 
AROP population (16.4 pps and 19.1 pps in the EU, 
respectively) (65). 
the 
Similarly, 
(expenditure-based) AROP population, the share of 
individuals living in households with budget shares 
for  private  transport  fuels (66)  above  6%  would 
have  decreased  by  0.8 pps  (the  EU  average 
increased  by  5.3 pps)  to  37.6%  in  January  2023, 
yet  standing  at  a  level  above  the  EU  average 
(37.1%). 

among 

public 

While 
considered 
transport 
relatively affordable, Malta is among the EU 
countries  that  rely  most  heavily  on  private 
cars.  More  than  two  thirds  (69%)  of  citizens  in 

is 

(63)  Energy poverty is a multi-dimensional concept. The indicator 
used focuses on an outcome of energy poverty. Further 
indicators are available at the Energy Poverty Advisory Hub.   

in 

regards 

Malta  indicate  that  a  car  is  their  most  common 
mode  of  daily  transport. (67)  At  the  same  time, 
they  perceive  public  transport  to  be  relatively 
available  (59%  vs  55%  in  the  EU),  affordable 
(71% vs 54% in the EU) and of good quality (59% 
the  EU). (68)  As 
vs  60% 
these 
perceptions,  rural  areas  in  Malta  perform  better 
than urban areas, and also better when compared 
to  rural  areas  in  the  EU  overall (69).  The  average 
carbon  footprint  of  the  top  10%  of  emitters 
among the population in Malta is about 3.9 times 
higher  than  that  of  the  bottom  50%  (see  Graph 
A8.1),  i.e.  slightly  less  pronounced  than  the  EU 
average 
includes 
measures  to  tackle  mobility  challenges  through 
decarbonisation of and enhanced access to public 
transport.  In  Malta,  the  average  levels  of  air 
pollution  in  2020  stood  below  the  EU  average 
(10.1  vs  11.2  µg/m  PM2.5),  with  all  regions 
exposed  to  critical  levels  of  air  pollution (70).  This 
has led to significant health impacts, in particular 
on  vulnerable  groups,  and  to  153  premature 
deaths annually (71).  

times).  Malta’s  RRP 

(5.0 

(67)  Special Eurobarometer 527. 

(68)  The 2021 National Household Travel Survey indicates that 
private cars were used for 84% of all trips and reports 
concerns regarding service quality (including punctuality and 
journey duration time). 

(64)  Products defined according to the European Classification of 

(69)  EU (rural): 46%, 48%, 56% respectively. Special 

Individual Consumption according to Purpose (ECOICOP): CP045. 

Eurobarometer 527. 

(65)  EMPL-JRC GD-AMEDI/AMEDI+ ; see details in the related 

(70)  Twice higher the recommendations in the WHO Air Quality 

technical brief.  

(66)  ECOICOP: CP0722. 

Guidelines. (annual exposure of 5µg/m3) 

(71)  EEA- Air Quality Health Risk Assessment 

41 

IndicatorDescriptionMT 2015MT LatestEU LatestGHG per workerGreenhouse gas emissions per worker - CO2 equivalent tonnes10.67.5 (2021)13.7 (2021)Employment EIIEmployment share in energy-intensive industries, including mining and quarrying (NACE B), chemicals (C20), minerals (C23), metals (C24), automotive (C29) - %1.61.3 (2020)3 (2020)Energy povertyShare of the total population living in a household unable to keep its home adequately warm - %14.17.8 (2021)6.9 (2021)Transport poverty (proxy)Estimated share of the AROP population that spends over 6% of expenditure on fuels for personal transport - %38.437.6 (2023)37.1 (2023)Carbon inequalityAverage emissions per capita of top 10% of emitters vs bottom 50% of emitters3.83.9 (2020)5 (2020) 
                                                 
 
 
                                                 
 
   
 
PRODUCTIVITY 
ANNEX 9: RESOURCE PRODUCTIVITY, EFFICIENCY AND CIRCULARITY 

rates and subsequent recycling rates, in particular 
for packaging and biowaste. 

The  industrial  system  in  Malta  is  circular, 
especially  in  resource  productivity  where 
Malta  fares  above  the  EU  average.  The 
economy in Malta, particularly industry, is efficient 
at  using  materials  to  produce  wealth.  In  2021, 
Malta  generated  2.7  purchasing  power  standard 
per  kg  of  material  consumed,  putting  Malta’s 
resource productivity above the EU average of 2.3. 
Malta  has  introduced  sectorial  strategies  for  both 
construction and plastics. 

remains 
The  built  environment  system 
critical as construction grows at a rapid rate. 
This  is  causing  major  environmental  challenges 
such  as  land  sealing,  environmental  impacts  and 
construction  and 
increasing  generation  of 
demolition  waste.  For  instance,  the  share  of 
habitats 
status  has 
dramatically  increased  from  6.7%  to  58.6%  in 
to 
has 
2013-2018.  Malta 
counterbalance  the  situation  by  making  the 
Building 
fully 
Construction 
operational  and  by  adopting  a  strategy  for 
construction and demolition waste (75). 

conservation 

Authority 

in  bad 

taken 

steps 

and 

Graph A9.1: Trend in material use 

The  circular  economy  transition  is  key  to 
climate  and 
delivering  on 
the  EU’s 
environmental  goals  and  provides 
large 
socio-economic  benefits. It  spurs  job  growth, 
innovation  and  competitiveness  and 
fosters 
resilience  and  resource  security.  The  circularity 
transition  of  industry,  the  built  environment  and 
agri-food  can  generate  significant  environmental 
improvements (see Annex 6), as they rank among 
the most resource-intensive systems. 

Despite  recent  progress,  Malta’s  circular 
economy  transition  is  insufficient  and  needs 
accelerating  to  meet  the  EU’s  circular 
economy goals. The EU’s 2020 circular economy 
action plan (CEAP) (72) aims at doubling the circular 
material  use  rate  between  2020  and  2030. 
Malta’s  circular  material  use  rate  increased  from 
4.2%  in  2016  to  11.4%  in  2021.  However,  this 
rate is still below the EU 2021 average of 11.7%. 
The  CEAP  also  aims  to  significantly  decrease  the 
EU’s  material  footprint.  In  2020,  Malta’s  material 
footprint  (18.1  tonnes  per  capita)  was  above  the 
2021 EU-27 average (13.7 tonnes per capita).  

Malta’s  recently  adopted  circular  economy 
policies  need  to  show  results  on  the  ground.  
In  2020,  Malta  adopted  the  country’s  circular 
economy  strategy  for  2020-2030 (73)  with  a 
strong  waste  management  component  (including 
curbing  landfilling  and  boosting  recycling).  It  also 
covers 
to  extended  producer 
responsibility and green financing. Malta’s recently 
adopted  new  waste  management  plan  (2021-
2030) (74)  provides  the  statutory  framework  to 
move waste management up the waste hierarchy. 

related 

issues 

Malta’s  waste  management  performance  is 
critically  poor.  With  a  13.6%  recycling  rate  in 
2021,  Malta  missed  the  EU  2020  50%  municipal 
waste  recycling  target.  Malta  is  at  serious  risk  of 
missing  the  2025  target  of  55%  preparation  for 
re-use and recycling of municipal solid waste and 
the  2025  target  of  65%  of  packaging  waste 
recycling. The distance to the 2035 target of 10% 
landfilling of municipal waste is also considerable. 
Malta needs to improve separate-waste collection 

(72)  A new Circular Economy Action Plan (europa.eu) 

(73)  RRRA, 2019, Towards a circular economy 2020-2030 

Source: Eurostat 

(74)  ERA, 2021, Long-term waste management plan 2021-2030, 

(75)  ERA, 2020, Construction and demolition waste strategy for 

link  

Malta, link 

42 

0.020.040.060.080.0100.0120.00.02.04.06.08.010.012.014.016.018.020.0201620172018201920202021kg/capitatonnes/capitaMaterial footprint Malta (tonnes/capita)Material footprint EU-27 (tonnes/capita)Trade in recyclable raw materials Malta (imports extra EU, kg/capita)Trade in recyclable raw materials EU-27 (imports extra EU, kg/capita) 
 
 
                                                 
               
 
                                                 
 
Table A9.1: Overall and systemic indicators on circularity 

(1) Persons employed in the circular economy only tracks direct jobs in selected sub-sectors of NACE codes E, C, G and S; (2) the 
circular material use rate measures the share of material recovered and fed back into the economy in overall material use; (3) the 
recovery rate of construction and demolition waste includes waste which is prepared for reuse, recycled or subject to material 
recovery, including through backfilling operations; (4) soil sealing: 2016 column refers to 2015 data; (5) food waste includes 
primary production, processing and manufacturing, retail and distribution, restaurants and food services, and households.  
Source: Eurostat, European Environment Agency 

Graph A9.2: Treatment of municipal waste 

Source: Eurostat 

The  agri-food  system  has  yet  to  design  out 
food  waste  and  pollution  and  efficiently 
manage  water  resources.  Although  food  waste 
statistics  are  not  available  for  Malta,  municipal 
waste generation in Malta can be used as a proxy 
to reach conclusions in that field. Municipal waste 
has continued to increase in recent years, reaching 
611 kg/year/inhabitant in 2021, well above the EU 
is 
average  (530  kg/year/inhabitant).  No  data 

43 

available  on  composting  and  anaerobic  digestion 
of  organic  waste  in  Malta;  however,  considering 
the  very  low  recycling  rate  in  Malta  (13.6%  in 
2021),  the  levels  of  treatments  of  organic  waste 
are  considered  to  be  equally  low.  In  Malta,  the 
water-exploitation index plus (WEI+) was 29.6% in 
2019,  indicating  water  scarcity (76).  There  remains 
scope  to  use  more  efficient  farming  techniques, 
promote water reuse and spread good practices in 
water-scarce  areas.  0.62%  of  Malta’s  land  area 
was under organic farming in 2020 (see table A6.1 
in Annex 6), far from the EU average of 9.1%. 

There remains a financing gap in the circular 
economy, 
including  waste  management.  
Additional  investments  are  required  to  address 
growing  needs.  The  financing  gap  was  estimated 
at  EUR  37  million  per  year  between  2014  and 
2020.  Over  this  period,  investment  needs  were 
estimated  to  be  at  least  EUR  66  million  per  year 
while  investment  baselines  were  EUR  29  million 
per year (see Annex 6).  Additional investments are 
needed  to  improve  separate  collection  of  waste 
and  recycling  infrastructure  to  divert  waste  from 
landfilling. 

(76)  The water-exploitation index plus (WEI+) is a measure of 
total fresh water use as a percentage of renewable fresh 
water resources (groundwater and surface water) at a given 
time and place. It quantifies how much water is abstracted 
and how much water is returned after use to the 
environment” 

642666672697643611-1000100200300400500600700800201620172018201920202021Kg per capita Difference waste generated/treatmentLandfill/disposalTotal incineration (including energy recovery)Composting and digestionMaterial recyclingEU-27AREA201620172018201920202021EU-27 Latest year EU-27Overall state of the circular economyMaterial footprint (tonnes/capita)11.711.410.612.018.1-13.72020YoY growth in persons employed in the circular economy (%)1------2.92019Water exploitation index plus (WEI+) (%)42.535.226.129.6--3.62019IndustryResource productivity (purchasing power standard (PPS) per kilogram)2.02.62.42.72.32.82.32021Circular material use rate (%)24.26.58.37.713.311.411.72021Recycling rate (% of municipal waste)12.711.510.49.110.913.649.62021Built environmentRecovery rate from construction and demolition waste (%)3100.0-100.0-100.0-89.02020Soil sealing index (base year = 2006)4100.8-106.1---108.32018Agri-foodFood waste (kg per capita)5----154.0-131.02020Composting and digestion (kg per capita)0.00.00.00.00.00.0100.02021 
             
 
                                                 
 
       
 
ANNEX 10: DIGITAL TRANSFORMATION 

transformation  by  2030, 

Digital  transformation  is  key  to  ensuring  a 
resilient and competitive economy. In line with 
the  Digital  Decade  Policy  Programme,  and  in 
particular  with  the  targets  in  that  Programme  for 
digital 
this  Annex 
describes  Malta’s  performance  on  digital  skills, 
digital 
the 
digitalisation  of  businesses  and  public  services. 
Where relevant, it makes reference to progress on 
implementing  the  Recovery  and  Resilience  Plan 
(RRP). Malta allocates 26% of its total RRP budget 
to digital (EUR 80 million) (77). 

infrastructure/connectivity 

and 

The  Digital  Decade  Policy  Programme  sets 
out a pathway for Europe’s successful digital 
transformation  by  2030.  The  Programme 
provides  a  framework  for  assessing  the  EU’s  and 
Member States’ digital transformation, notably via 
the  Digital  Economy  and  Society  Index  (DESI).  It 
also  provides  a  way  for  the  EU  and  its  Member 
States  to  work  together,  including  via  multi-
country  projects,  to  accelerate  progress  towards 
the  Digital  Decade  digital  targets  and  general 
objectives (78).  More  generally,  several  aspects  of 
digital  transformation  are  particularly  relevant  in 
the current context. In 2023, the European Year of 
Skills, building the appropriate skillset to make full 
use of the opportunities that digital transformation 
offers  is  a  priority.  A  digitally  skilled  population 
increases the development and adoption of digital 
technologies  and  leads  to  productivity  gains (79). 
Digital  technologies,  infrastructure  and  tools  all 
play  a  role  in  the  fundamental  transformation 
needed to adapt the energy system to the current 
structural challenges (80). 

Malta  performs  above  the  EU  average  on 
digital  skills,  but  shortages  in  the  labour 
market persist. The percentage of ICT specialists 
in the Maltese workforce is, at 4.9%, slightly above 

(77)  The share of financial allocations that contribute to digital 
objectives has been calculated using Annex VII of the RRF 
Regulation. 

(78)  The Digital Decade targets as measured by DESI indicators 
and complementary data sources are integrated to the 
extent currently available and/or considered particularly 
relevant in the MS-specific context.  

(79)  See for example OECD (2019): OECD Economic Outlook, 

Digitalisation and productivity: A story of complementarities, 
OECD Economic Outlook, Volume 2019 Issue 1 | OECD 
iLibrary (oecd-ilibrary.org). 

(80)  The need and possible actions for a digitalisation of the 
energy system are laid out in the Communication 
‘Digitalisation the energy system – EU action plan’ 
(COM(2022)552. 

jobs 

requiring 

EU  average.  However,  69%  of  enterprises  report 
ICT 
hard-to-fill  vacancies  for 
specialist skills, above the EU average of 63% (81). 
As  part  of  its  RRP,  Malta  launched  a  scholarship 
scheme  in  2021  to  support  students  studying 
artificial  intelligence,  cybersecurity,  data  science 
and  information  studies,  among  others.  There  is 
room  for  more  targeted  measures  to  ensure  that 
skilled talent can support the increasing uptake of 
facilitate  more 
advanced 
research and innovation by Maltese enterprises. 

technologies  and 

fibre 

performance 

coverage 
Progress  on  5G  and 
strengthens  Malta’s 
on 
connectivity. Since 2019, all Maltese households 
are being reached by very high capacity networks 
(VHCNs)  offering  speeds  of  1Gbps  and  more. 
Fibre-to-the-premises  (FTTP)  coverage  caught  up 
with  the  EU  average  of  56%  in  2022.  Malta  has 
achieved nationwide overall 5G coverage in 2022, 
but  there  is  room  for  improving  coverage  on 
essential bands for enabling advanced applications 
requiring  large  spectrum  bandwidth.  As  of  2022, 
5G coverage on the 3.4-3.8 GHz pioneer spectrum 
band  stands  at  20%,  significantly  below  the  EU 
average  of  41%.  While  spectrum  in  all  three  5G 
pioneer bands was made available in 2021, Malta 
has to date not assigned spectrum in the 700 MHz 
and 26 GHz bands, pointing to the small size of its 
territory and market. 

Maltese  enterprises,  including  SMEs,  have  a 
high 
level  of  digitalisation.  The  use  of 
advanced digital technologies is significantly more 
widespread among enterprises in Malta than in the 
EU  overall,  specifically  the  use  of  big  data 
analytics  (30%  vs  14%)  and  cloud  computing 
(47%  vs  34%).  Use  of  artificial  intelligence  is 
slightly  above  EU  average  (10%  vs  8%).  There  is 
still  room  for  SMEs  to  catch  up  with  their  larger 
peers.  The  Maltese  RRP  supports  investments  in 
the  digitalisation  of  businesses  with  two  grant 
schemes  launched  in  2022.  One  of  these  is 
specifically  designed  to  stimulate  the  uptake  of 
ICT  hardware  and  software  by  SMEs.  Beyond 
uptake, there are ample opportunities for stronger 
cooperation between the public sector, businesses, 
research  and 
to  strengthen 
and  academia 
innovation 
technologies. 
Malta’s  RRP  partly  addresses  this  challenge  with 
the  2021-2027  Smart  Specialisation  Strategy 

in  emerging  digital 

(81)  Eurostat: ICT specialists - statistics on hard-to-fill vacancies 
in enterprises (as % of enterprises which recruited,/tried to 
recruit ICT specialists), 2022.  

44 

 
 
                                                 
                                                 
 
adopted as part of its RRF. The strategy identifies 
digital  technologies  (e.g.  artificial  intelligence,  the 
Internet  of  Things,  high  performance  computing, 
distributed  ledger  technologies)  as  one  of  six 
priority  areas 
research 
infrastructure.  Considering  Malta’s  environmental 
challenges, there is an opportunity to invest in the 
development  and  use  of 
innovative  digital 
technologies in support of the green transition (e.g. 
applications  to  support  energy  efficiency,  water 
management, smart mobility, etc.).   

investment 

for 

in 

Malta  is  a  leader  in  digital  public  services. 
Citizens  and  businesses  can  access  nearly  all 
public  services  online  through  the  government’s 
one-stop-shop  portal  servizz.gov.  Malta’s  RRP 
includes  several  investments  to  further  improve 
digital public services, such as artificial intelligence 
solutions  to  improve  the  user  experience  on 
servizz.gov and measures to strengthen the overall 
security  and  capacity  of  the  government’s  IT 
infrastructure. 
electronic 
identification  (eID)  scheme,  notified  under  the 
eIDAS Regulation (82), can be used to log in to 91% 
of online public services (83), but not yet to access 
electronic  health  records,  hence  there  is  room  for 
improving  citizen  access  to  electronic  health 
records (Malta scores 77 out of 100).   

country’s 

The 

(82)  Regulation (EU) No 910/2014 

(83)  2022 eGovernment Benchmark 

45 

 
                                                 
Table A10.1: Key Digital Decade targets monitored by DESI indicators 

(1) The 20 million target represents about 10% of total employment.  
(2) The Fibre to the Premises coverage indicator is included separately as its evaluation will also be monitored separately and 
taken into consideration when interpreting VHCN coverage data in the Digital Decade.   
(3) At least 75 % of Union enterprises have taken up one or more of the following, in line with their business operations: (i) cloud 
computing services; (ii) big data; (iii) artificial intelligence.  

Source: Digital Economy and Society Index 

46 

DESI 2021DESI 2022DESI 2023DESI 2023(EU)Digital skillsAt least basic digital skillsNA61%61%54%80%% individuals2021202120212030ICT specialists (1)4.4%4.9%4.9%4.5%20 million% individuals in employment aged 15-7420202021202120212030Digital infrastructure/connectivityFixed Very High Capacity Network (VHCN) coverage100%100%100%73%100%% households20202021202220222030Fibre to the Premises (FTTP) coverage (2)41%48%56%56%-% households20202021202220222030Overall 5G coverage0%20%100%81%100%% populated areas202020212022202220305G coverage on the 3.4-3.8 GHz spectrum bandNANA20%41%-% populated areas202220222030Digitalisation of businessesSMEs with at least a basic level of digital intensityNANA78%69%90%% SMEs202220222030Big data (3)30%30%30%14%75%% enterprises20202020202020202030Cloud (3)NA48%48%34%75%% enterprises2021202120212030Artificial Intelligence (3)NA10%10%8%75%% enterprises2021202120212030Digitalisation of public servicesDigital public services for citizensNA10010077100Score (0 to 100)2021202220222030Digital public services for businessesNA979784100Score (0 to 100)2021202220222030Access to e-health recordsNANA7771100Score (0 to 100)202320232030 
 
  
 
 
ANNEX 11: INNOVATION 

This  Annex  provides  a  general  overview  of  the 
performance  of  Malta’s  research  and  innovation 
system,  which  is  essential  for  delivering  the  twin 
green and digital transition. 

the  European 

Malta  remains  a  ‘moderate  innovator’,  and 
the gap between its performance and the EU 
average  continues  to  widen.  According  to  the 
Innovation 
2022  edition  of 
Scoreboard (84),  Malta’s innovation performance is 
below  the  EU  average  (84.7%  against  89.7%  of 
the  EU  average  for  the moderate  innovators)  and 
continues to decline, with a sharp fall in 2021. This 
performance  is  mainly  attributed  to  low  R&D 
expenditure,  especially  in  the  public  sector,  and  a 
lack of skilled talent, notably graduates in science 
and engineering. 

Graph A11.1: R&D intensity in 2021 

The  lack  of  human  resources  for  research 
and  innovation  (R&I)  continues  to  weigh  on 
the performance of the Maltese R&I system. 
The  number  of  new  graduates  in  science  and 
engineering  per  thousand  population  aged  25-34 
dropped  from  8.1  in  2010  to  5.4  in  2020  and  is 
well  below  the  EU  average  of  16.  This  challenge 
has  been  a  growing  concern  for  several  years  in 
Malta,  especially  for  businesses  that  suffer  from 
the shortage of skilled workers (86). Attracting and 
retaining  new  talent,  including  foreign  talent, 
remains of utmost importance. In this respect, it is 
encouraging  that  the  share  of  foreign  doctoral 
students  has  significantly  increased  in  recent 
years (35.3% of all  doctorates in 2020 compared 
to 12.4% in 2015 (87). 

Graph A11.2: New graduates in science and 
engineering per thousand population aged 25-34 
in 2020 

Source: Eurostat 

Both  public  and  private  investment  in  R&D 
remains critically low. Total R&D intensity (85) is 
one  of  the  lowest  in  Europe.  Despite  the  slight 
increase  in  the  last  decade,  in  2021  it  stood  at 
0.64% against the EU average of 2.26% and was 
lower than in 2020. Public expenditure on R&D has 
been stagnant since 2010 (0.24% of GDP against 
EU  average  of  0.76%  in  2021),  while  business 
enterprise  expenditure  on  R&D,  despite  a  slight 
upswing  in  2020,  decreased  to  0.40%  in  2021, 
remaining  well  below  the  EU  average  of  1.49%. 
The  Maltese  recovery  and  resilience  plan  did  not 
tackle this underinvestment as the plan contained 
no planned investment in R&D. 

Source: Eurostat 

The  private  sector’s  potential  to  contribute 
to  Malta’s  innovation  performance  remains 
untapped.  According  to  the  European  Innovation 
Scoreboard,  between  2015  and  2022, 
the 
performance  of  Malta  with  regards  to  small  and 
introducing  product 
medium-sized  enterprises 
innovations  has  decreased,  with  a  particularly 
significant drop in 2021-22 (88). The level of public 
support  for  private  R&D  is  low  in  Malta  and 
decreased  over  the  last  decade,  from  0.04%  in 
2010  to  0.037% in  2019.  Moreover,  the  schemes 
available  to  companies  engaged  in  R&D  have  a 

(84)  2022 European Innovation Scoreboard, Country profile: Malta 
https://ec.europa.eu/assets/rtd/eis/2022/ec_rtd_eis-country-
profile-mt.pdf The EIS provides a comparative analysis of 
innovation performance in EU countries, including the relative 
strengths and weaknesses of their national innovation 
systems (also compared to the EU average). 

(85)  Defined as gross domestic expenditure on R&D as a 

percentage of GDP. 

(86)  2022 Report: Ensuring the Skills for Future Competitiveness, 

published by the Malta Employers’ Association 
https://www.maltaemployers.com/wp-content/uploads/FINAL-
DOSSIER-report_2.pdf. 

(87)  Source: Eurostat. 

(88)  2022 European Innovation Scoreboard, Country profile: Malta 
https://ec.europa.eu/assets/rtd/eis/2022/ec_rtd_eis-country-
profile-mt.pdf. 

47 

00,511,522,5R&D IntensityPublic expenditurePrivate expenditureas % of GDPEUMT0510152025IEFRPTATDKFIDEHUHREUESSIITLTELBESEPLNLCZEESKLVBGCYMTLU 
 
  
                                                 
      
                                                 
 
public-private  scientific  co-publications  increased 
to 6.9% in 2021, compared to 5.7% in 2020, it is 
still  below  its  2019  levels  and  slightly  below  the 
EU  average.  Moreover,  public  expenditure  on  R&D 
financed  by  businesses  remains  remarkably  low, 
ranking last in the EU (0.003% in 2019 against the 
EU  average  of  0.054%).  Academia-business 
cooperation  is  identified  as  a  priority  in  the 
Maltese  smart  specialisation  strategy  for  2021-
2027, but this has not yet translated into concrete 
measures. 

the 

schemes 

low  take-up,  which  might  be  due  to  a  number  of 
factors:  a  lack  of  capacity  and  resources  to 
prepare  successful  applications  and  make  use  of 
funding  opportunities;  the  administrative  burden 
involved 
in  making  applications,  which  often 
involve  red  tape  and  paperwork;  and  insufficient 
available (89). 
awareness 
of 
Regarding  technology  and 
innovation  outputs, 
while Malta’s patenting activity (number of patents 
filed  under  the  Patent  Cooperation  Treaty  (PCT)) 
remains  well  below  the  EU  average,  Malta 
performs  particularly  well  when  it  comes  to  the 
share of environment-related  patents in total  PCT 
patent applications. This suggests Malta has great 
potential  to  mobilise  its  R&I  capacities  to  foster 
and  accelerate  the  green  transition  through  the 
development  of  green  technologies.  Moreover, 
Malta performs above the EU average in terms of 
employment  in  fast-growing  companies  in  the 
50%  most  innovative  sectors  (8.2%  in  2019 
against the EU average of 5.5%). 

Over  the  last  decade,  academia-business 
cooperation  has  slightly 
improved  but 
remains  modest.  Indeed,  while  the  share  of 

Table A11.1: Key innovation indicators 

(89)  2019 peer review of the Maltese R&I system: 

https://ec.europa.eu/research-and-
innovation/en/statistics/policy-support-facility/peer-review-
maltese-research-and-innovation-system. 

(1) EU average for the latest available year or the year with the highest number of country data. 
Source: Eurostat, OECD, DG JRC, Science-Metrix (Scopus database and EPO’s Patent Statistical database), Invest Europe 

48 

EUaverage (1)R&D intensity (GERD as % of GDP)0.590.720.560.650.642.26Public expenditure on R&D as % of GDP0.230.350.220.240.240.76Business enterprise expenditure on R&D (BERD) as % of GDP0.360.370.350.420.401.49Scientific publications of the country within the top 10% most cited publications worldwide as % of total publications of the country 6.88.65.1::9.8Patent Cooperation Treaty (PCT) patent applications per billion GDP (in PPS)0,31.01.3::3.3Public-private scientific co-publications as % of total publications4.95.27.55.76.97.1Public expenditure on R&D financed by business enterprise (national) as % of GDP0.0030.0020.003::0.054New graduates in science & engineering per thousand pop. aged 25-348.19.76.35.4:16.0Total public sector support for BERD as % of GDP0.040.0450.037::0.194R&D tax incentives: foregone revenues as % of GDP0.0310.0190.027::0.100Share of environment-related patents in total patent applications filed under PCT (%) 15.4 44.0 23.1: : 13.3Venture capital (market statistics) as % of GDP0.010.010.0060.0060.0070.074Employment in fast-growing enterprises in 50% most innovative sectors5.97.38.2::5,520202021Malta201020152019Finance 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  
                                                 
 
 
  
 
ANNEX 12: INDUSTRY AND SINGLE MARKET 

Labour productivity  has  evolved at  a similar 
pace  as  the  EU  average  in  recent  years, 
although  differences  between  sectors  are 
considerable.  Labour  productivity  per  person 
employed  has  been  mainly  driven  by  high 
productivity sectors in manufacturing and services 
such as information and communication, gambling 
and  betting  as  well  as professional,  scientific  and 
technical  services.  Labour  productivity  growth  per 
person in industry was steadily improving in recent 
years  and  in  2022  it  reached  5.4%  (see  table 
A12.2).  

Graph A12.1: Productivity per person by sector 

Malta’s  international  companies  interviewed  by 
Ernst and Young have listed supply chain concerns 
in  the  coming  months  and  74%  of  them  stated 
that  the  rising  cost  of  raw  materials  and 
components,  together  with  the  increase  in  freight 
costs,  is  heavily  impacting  firms  in  Malta. (91) 
These  external  dependencies  might  explain  the 
high  level  of  the  Economic  Uncertainty  indicator 
(EUI) (92) in the second half of 2022. 

Graph A12.2: Shares of services exports 

Source: European Commission. 

(1) Trade in services – share in total world exports (%)  
Source: Commission Services.  

invest 

Due  to  its  size  and  geographical  position, 
Malta is highly dependent on global markets 
and  therefore  strongly  exposed  to  supply 
disruptions  and  volatility  of  prices.  Although 
Malta  has  relatively  low  dependency  on  Russia,  it 
is among the EU countries with the highest energy 
import  dependency  (97.6%  in  2020).  The  current 
situation  may  encourage  Malta  to 
in 
renewable  energy  since  the  country  currently  has 
one of the lowest shares of renewables in energy 
consumption (10.7%) in the EU (see also Annex 6). 
According  to  the  2022  EIB  Investment  Survey, 
Maltese  firms  reported  the  highest  share  of 
improve  energy 
investment 
efficiency  (16%  vs.  10%  EU)  in  the  past  year (90). 
Malta’s  industrial  production  capacity  relies  to  a 
large  extent  on  machinery,  energy  and  chemical 
imports  from  EU  Member  States  and  Asia. 
Concerning  additional  challenges  for 
industry, 
manufacturing  firms  in  particular  are  reporting 
shortages of raw materials and components (42% 
in  2022  vs  47%  EU)  as  their  main  production 
constraint  (see  table  A12.2).  Moreover,  64%  of 

in  measures 

to 

(90)  EIB Investment Survey 2022. 

49 

for 

services,  while 

Malta  is  well  integrated  into  the  Single 
certain 
Market 
restrictions  persist.  Malta’s  services 
trade 
integration  represents  57.1%  of  GDP, (93)  the 
second  highest  of  all  Member  States  and  far 
ahead of the EU average (14.5%). Services exports 
are mainly dominated by “other business services”, 
financial services and intellectual property charges 
(see  graph  A12.2).  However,  the  weakening  of 
external  demand  from  European  trading  partners, 
such  as  Germany  and  Italy,  will  restrict  services 
trade  performance.  In  contrast  to  the  services 
trade  integration,  Malta’s  trade  integration  in  the 
Single Market for goods (13.7%) remains below EU 
average (29% according to Eurostat.  

Delays  in  public  procurement  decisions  and 
transposition  delays  are  challenges  for 

(91)  EY Future of manufacturing 2022. 

(92)  The EUI is a composite indicator which shows how difficult it 
is for managers/consumers to make predictions of the future 
business/financial situation.  

(93)  Measured as average value of imports and exports as a 

share of GDP (https://single-market-
scoreboard.ec.europa.eu/competitiveness/integration_en) 

020406080100120140160180030507091113151719212003=100Market services (G_N)Manufacturing (C)Construction (F)Tradable (A_E, G_J)Non tradable (F, K_U)Transport4.67%Travel1.64%Construction0.04%Insurance and pension services1.20%Financial services20.93%Charges for the use of intellectual property n.i.e.…Telecom., computer, & information serv.1.54%Research and development services0.06%Professional and management consulting services27.18%Technical, trade-related, and other business services28.58%Personal, cultural, and recreational services3.65%Goods-related services0.49%2021 
 
      
                                                 
      
                                                 
 
 
in 

Malta’s  overall  business  conditions,  despite 
its generally sufficient performance in Single 
Market  indicators.  According  to  the  Single 
Market  Scoreboard,  Malta  is  among  the  best-
transposing 
performing  Member  States 
directives 
the 
in 
(1.1%  vs  1.6%  EU)  and 
correctness  of  its  transpositions.  In  recent  years, 
Malta has considerably improved its average delay 
in transposing directives, which stands currently at 
3.7 months  compared  to  EU  average  at  8.6 
months (94).  Yet 
transposition  delays  have 
occurred,  possibly  due  to  Covid-19  pandemic 
constraints.  Furthermore,  in  public  procurement 
the rate of single bids (only one submitted offer) is 
15% (9% in 2021) which is below the EU average 
(25%)  and  shows  the  functioning  competition 
between  bidding  companies  during  public  tender 
procedures.  However,  firms  are  criticising  some 
arbitrary  practices  and  rules  in  admitting  firms  to 
tenders and flag the challenges of price setting in 
times  of  supply  shortages  and  volatile  price 
developments (95). Additionally, it takes a relatively 
long  time  (156  days)  for  the  public  authorities  to 
reach a decision on a tender (the EU average is 99 
days) (96).  Compared  to  2020,  Malta’s  SOLVIT 
resolution rate dropped 7 points in 2021 (87% vs 
94%) but  the  handling  time,  specifically  the  time 
taken to close cases, increased (97).  

its 

such 

barriers 

framework 

long-term 

environment 

improve 
especially 

Tackling 
as 
strengthening the regulatory framework and 
reducing  payment  delays  would  improve  the 
further. 
Maltese  business 
Reforming 
and 
regulatory 
strengthening  its  institutional  framework  would 
business 
considerably 
environment, 
increasing 
transparency, 
improving  bankruptcy  rules  and 
reducing  payment  delays.  This  last  issue  was 
identified by 61% of SMEs as a pressing problem, 
compared  to  the  EU  average  of  43%.  Investment 
under the recovery and resilience plan focuses on 
improving  digitalisation  in  public  administration, 
public services, companies and the justice system. 
Although,  Malta  has  recently 
introduced  new 
regulation  to  offer  more  transparency  to  legal 

Malta’s 
by 

(94)  EC, Single Market Scoreboard, forthcoming. Country data: 

Malta | Single Market Scoreboard (europa.eu) 

(95)  The Malta Chamber (2022). Recommendations for the 2023 

National Budget. 

(96)  EC, Single Market Scoreboard, forthcoming. 

Country data: 

the 

in  Malta  are  subject 

professions, 
restrictiveness  of 
regulatory 
regulated  professions  in  Malta  is  higher  than  the 
EU  average  for  some  professions,  such  as 
accountants, estate agents, and tourist guides (98). 
to  specific 
Lawyers 
and 
rules 
incompatibility 
requirements, 
multidisciplinary  restrictions.  Also  tourist  guides 
would  benefit  from  a  clearer,  focussed  definition 
of  the  reserved  activities  as  well  as  from  a 
revision of the list of sites reserved for holders of 
tourist  guide  qualifications.  Overall, 
specific 
reducing 
in  professional 
regulatory  barriers 
services  can  promote  entry  and  may  encourage 
competition  on  quality  and  prices,  as  well  as 
productivity increases in the regulated sectors.  

Maltese  SMEs  would  benefit  from  better 
access  to  finance,  especially  to  alternative 
financing and the use of equity. SMEs in Malta 
are  the  backbone  of  the  economy  and  represent 
the  main  contributors  to  economic  growth  and 
employment. In 2022, SMEs’ value added in Malta 
grew by 13.1%, after dropping 15.5% in 2021 (99). 
Various government initiatives had been created to 
support  Maltese  businesses  during  the  COVID-19 
pandemic,  such  as  loan  guarantees,  tax  deferrals 
and  a  wage  supplement  scheme.  These  are 
mirrored by a low level of bankruptcies compared 
to the 2021 EU average of 74.5 vs 63.6 in Malta. 
Improving access to finance for SMEs is crucial for 
the Maltese business environment, since, according 
to the overall EIF index, Malta is in the bottom of 
the  EU  ranking  for  this.  In  2021,  the  share  of 
leasing or hire purchase represented only 6%, still 
below  the  EU  share  (22%).  Other  loans  based  on 
personal ties, such as loans from family, friends or 
shareholders  with  close  connections  to  the  firm 
decreased from 13% to 10%. Meanwhile, domestic 
firms  made  no  use  of  equity  or  debt  securities. 
Other  financing  channels  such  as business  angels 
and  crowdfunding  remain  unexploited.  Malta’s 
venture  capital  investment’s  share  of  GDP  is 
among the lowest in the European Union. (100) 

Malta faces considerable shortages of skilled 
workers  and  skills  mismatches  across 
sectors.  Maltese  firms  are  increasingly  facing 
labour  shortages,  especially  in  high-value  service 
sectors such as financial services, information and 

(98)  Communication on updating the reform recommendations 
for regulation in professional services, COM(2021)385). 

Malta | Single Market Scoreboard (europa.eu) 

(99)  Malta SME Factsheet (2021). 

(97)  Single Market Scoreboard – SOLVIT 

(100) Access-to-Finance-2021.pdf (centralbankmalta.org) 

50 

 
                                                 
                                                 
communication  and  gaming.  This  situation  has 
worsened  in  recent  years.  In  the  Ernst  &  Young 
Attractiveness  Survey,  54%  of 
respondents 
reported they were looking for staff with specialist 
skills (101).  According  to  the  SAFE  survey,  35%  of 
SMEs  indicate  “availability  of  skilled  staff  or 
experienced  managers”  as  one  of  their  most 
pressing  problems (102).  The  tight  Maltese  labour 
market  situation 
its 
geographical  position  and  size.  The  increased 
employment  of  foreign  workers  only  partially 
alleviated the situation. 

is  exacerbated  due  to 

Graph A12.3: Business environment and 
productivity drivers 

Source: 1) % of GDP, 2021 Eurostat;  
2) composite indicator, 2021 European Investment Fund 
access to finance index;  
3) average payment delay in number of days, 2022 Intrum;  
4) % of firms in manufacturing facing constraints, 2022 
European Commission business consumer survey;  
5) proportion of contracts awarded with a single bidder, 2022 
Single Market Scoreboard. 

(101) EY Attractiveness Survey 2022. 

(102) European Commission (2022). Survey on access to finance 

of enterprises (SAFE), Analytical Report 2022. 

51 

2) EIF access tofinance index4) Materialshortage4) Labourshortage5) Single bidsEuropean UnionMalta 
   
 
 
 
 
 
                                                 
 
Table A12.1: Industry and the single market 

(*) last available year  
Source: (1) AMECO, (2) Eurostat, (3) ECFIN BCS, (4) Eurostat, (5) COMEXT and Commission calculations, (6) Eurostat, (7) Eurostat, 
(8) OECD, (9) Single Market Scoreboard, (10) EIB survey, (11) Eurostat: (12) Intrum, (13) SAFE Survey, (14) EIF SME Access to 
Finance Index. 

52 

POLICY AREAINDICATOR NAME20182019202020212022EU27 average (*)Net private investment, level of private capital stock, net of depreciation, % GDP (1)66.55.16.211.63.7Net public investment, level of public capital stock, net of depreciation, % GDP (1)1.51.921.71.20.4Real labour productivity per person in industry (% yoy)(2)4.56-0.64.65.41.4Cost competitive-nessNominal unit labour cost in industry (% yoy)(2)4.7-1.4n.a.n.a.n.a.2.9Material shortage (industry), firms facing constraints, % (3)539474247Labour shortage using survey data (industry), firms facing constraints, % (3)464616273328Vacancy rate (business economy)(4)2.92.81.72.433.1Concentration in selected raw materials, Import concentration index based on a basket of critical raw materials (5)0.210.170.150.160.190.18Installed renewables electricity capacity, % of total electricity produced (6)0000n.a. 50.9Single Market integrationEU trade integration, % (7)n.a.n.a.n.a.71.470.145.8RestrictionsEEA Services Trade Restrictiveness Index (8)n.a.n.a.n.a.n.a.n.a.0.05Public procurement Single bids, % of total contractors (9)11131591529Investment obstaclesImpact of regulation on long-term investment, % of firms reporting business regulation as major obstacle (10)16.710.116.215.714.729.6Bankruptcies, Index (2015=100)(11)54.5127.381.863.6n.a.86.8Business registrations, Index (2015=100) (11)117.3101.996.9104.688.4121.2Payment gap - corporates B2B, difference in days between offered and actual payment (12)n.a.n.a.n.a.n.a.n.a.13Payment gap - public sector, difference in days between offered and actual payment (12)n.a.n.a.n.a.n.a.n.a.15Share of SMEs experiencing late payments in past 6 months, % (13)n.a.71.573.864.460.943EIF Access to finance index - Loan, Composite: SME external financing over last 6 months, index values between 0 and 1 (14)0.720.740.550.45n.a.0.46EIF Access to finance index - Equity, Composite: VC/GDP, IPO/GDP, SMEs using equity, index values between 0 and 1 (14)0.270.170.050.05n.a.0.23Business demographyLate paymentsAccess to financeHEADLINE INDICATORSRESILIENCESINGLE MARKETBUSINESS ENVIRONMENT - SMEsEconomic StructureShortagesStrategic dependencies 
 
 
 
 
 
 
 
 
 
 
 
      
 
ANNEX 13: PUBLIC ADMINISTRATION 

This  Annex  outlines  the  performance  of 
is 
Malta’s  public  administration,  which 
essential for providing services and  carrying 
out  reforms.  The  effectiveness  of  Malta’s  public 
EU-27 
administration 
average (103). 
service 
strategy (104)  focuses  on  improving  the  quality, 
accountability  and 
sustainability  of  public 
services.   Its  action  plan  contains  45  initiatives, 
with a particular emphasis on digitalisation.   

the 
public 

5-year 

below 

ranks 

The 

Malta’s  public  service  has  a  young  profile, 
but  one  of  the  lowest  shares  in  the  EU  of 
public servants with higher education. People 
working  in  public  administration,  defence  and 
social  security,  especially  those  in  high-skilled 
occupations, have a younger profile relative to the 
total  economy,  as  well  as  to  the  EU-27  average 
(Graph  A13.1). The share of women in senior civil 
service positions reached 45% in 2022. The public 
service  management  code  has  been  revised  to 
provide clearer information on public appointment 
procedures,  salaries,  working  conditions,  conduct 
and  discipline.  Staff  surveys  of  civil  servants  are 
conducted  on  an  ad  hoc  basis.  The  recovery  and 
resilience  plan  led  to  the  setting  up  of  remote 
offices  across  Malta  to  be  used  by  public  service 
employees in all ministries. 

instruments.  While 

The  quality  of  the  Maltese  regulatory 
framework is weakened by the limited use of 
impact 
evidence-based 
assessment reports are mandatory for all primary 
and  secondary  legislation,  there  is  no  systematic 
review  of  achievement  of  policy  goals.  Ex post 
evaluations  are  not  systematic,  nor  standardised, 
and  responsibility  for  regulatory  policy  is  spread 
bodies (105).  
across 
Stakeholders  repeatedly  raise  concerns  about  the 
lack of consultation in the preparation of a number 
of  legislative  proposals (106),  in  particular  in  the 
early stages of the process.  

government 

various 

Malta  continues  to  be  a  leader  in  providing 
to  people  and 
digital  public  services 

(103) Worldwide Governance Indicators, 2021.  

(104) 

Achieving a Service of Excellence: A 5-year strategy for 

the public service. 

(105) 

The OECD report on Better Regulation Practices across 
the European Union 2022 indicates that Malta is well below 
the OECD average in terms of the ex post evaluation of 
regulations. 

businesses.  In  2022,  79%  of  Maltese  people 
found the provision of public services to be good, a 
10  percentage  point  increase  compared  to  2021 
and well above the EU-27 average of 52% (107). All 
digital  public  services  are  accessible  through  the 
government’s one-stop-shop portal for people and 
businesses (servizz.gov), which includes a chatbot. 
Malta  also  scores  well  in  reusing  information 
previously  gathered  from  administrations  in  pre-
filled  forms.  However,  the  country  scores  the 
lowest  in  the  EU-27  on  facilitating  access  to  and 
use  of  open  data  (Graph  A13.2).  This  reduces the 
potential for publicly available information to hold 
institutions  accountable 
to  citizens.  Further 
initiatives  to  accelerate  the  digital  transformation 
of  government  are  under  way, 
including  on 
cybersecurity and use of data (108). 

Graph A13.1: Higher education attainment level (in 
percent) of 25-64 year-olds by sector and 
occupation 

(1) 2022 data 
Source: European Commission, based on the Labour Force 
Survey 

The  justice  system  faces  serious  challenges 
to  its  efficiency.  The  estimated  time  needed  to 
resolve  administrative  cases  at  first  instance  is 
1356  days,  the  longest  in  the  EU.  The  clearance 
rate for civil, commercial, administrative and other 
cases  remained  below  100%  (around  89%  in 
2020) and it is especially low for litigious civil and 
commercial  cases  (around  78%  in  2021).  The 
number  of  incoming  cases,  in  particular  civil, 
cases,  has 
commercial  and  administrative 

(107) 

(108) 

Standard Eurobarometer 97 

Malta Information Technology Agency (MITA) Strategy 

(106) Rule of Law Report 2022, European Commission 

2021-2023 

53 

01020304050607080MTEU-27MTEU-27MTEU-27MTEU-27Public admin.,defence andsocial securityEducationHealthcareTotal economyHigher education attainmentHigh-skilled occupationsMedium-skilled occupationsUnskilled occupationsArmed forces 
 
                                                 
   
                                                 
 
Table A13.1: Public administration indicators 

(1) High values denote a good performance, except for indicator # 6. (2) 2022 value. If not available, the 2021 value is shown. 
(3) 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. (4) Defined as the absolute value of the difference between the 
percentage of men and women in senior civil service positions. 
Flags: (b) break in time series; (d) definition differs; (u) low reliability. 
Source: ICT use survey, Eurostat (# 1); E-government benchmark report (# 2); Open data maturity report (# 3); Labour Force 
Survey, Eurostat (# 4, 5, 7), European Institute for Gender Equality (# 6); Fiscal Governance Database (# 8, 9); OECD Indicators of 
Regulatory Policy and Governance (# 10). 

Graph A13.2: Open government data maturity 
indicator: 2022 scores (% of the total maximum 
score) (rhs); country ranking, overall score (lhs) 

significantly  increased  (from  2.1  cases  per  100 
inhabitants  in  2020  to  2.3  in  2021).  The  overall 
quality  of  the  justice  system  is  good,  but the  low 
number  of  judges  per  inhabitant  and  the  lack  of 
clerical  staff  remain  a  concern.  The  level  of 
digitalisation  in  the  justice  system  is  advanced.  A 
new  national  digital  justice  strategy  was  adopted 
and  will  be  carried  out  in  part  through  a  EUR  10 
million  investment  financed  by  the  Recovery  and 
Resilience  Facility.  No  systemic  deficiencies  in 
judicial independence have been reported (109). 

(1) Right hand side chart: low values denote a good 
performance 
Source: Open Data Maturity | data.europa.eu 

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

justice system in Malta, see the 2023 EU Justice Scoreboard 
(forthcoming) and the country chapter for Malta in the 2023 
Rule of Law Report (forthcoming). 

54 

0510152025300%10%20%30%40%50%60%70%80%90%PolicyQualityPortalImpactTotal20182019202020212022Open data 2022Open data rankingMT2022EU-27MT2022 scores (lhs)Countryranking (rhs)MT201720182019202020212022EU-27(2)156.256.858.063.472.3n/a64.82n/an/an/a96.395.595.772.93n/a0.20.40.50.50.40.8430.129.233.033.129.0 (b)30.952.0514.3 (b)18.123.115.222.2 (b)22.116.9622.623.016.413.810.810.011.072.82.42.72.93.1 (b)2.81.580.80.80.80.80.8n/a0.791.31.31.31.31.3n/a1.5101.44n/an/an/a1.44n/a1.7Medium term budgetary framework indexIndicator (1)E-government and open government dataShare of individuals who used the internet within the last year to interact with public authorities (%)E-government benchmark overall score (3) Open data and portal maturity indexEducational attainment level, adult learning, gender parity and ageingShare of public administration employees with tertiary education (levels 5-8, %)Participation rate of public administration employees in adult learning (%)Gender parity in senior civil service positions (4)Ratio of 25-49 to 50-64 year olds in NACE sector OPublic financial management Strength of fiscal rules indexEvidence-based policy makingRegulatory governance 
 
                                                 
   
 
   
 
FAIRNESS 
ANNEX 14: EMPLOYMENT, SKILLS AND SOCIAL POLICY CHALLENGES IN LIGHT OF 
THE EUROPEAN PILLAR OF SOCIAL RIGHTS  

The  European  Pillar  of  Social  Rights  is  the 
compass  for  upward  convergence  towards 
better  working  and  living  conditions  in  the 
EU.  This  Annex  provides  an  overview  of  Malta’s 
progress in implementing the Pillar’s 20 principles 
and EU headline and national targets for 2030 on 
employment, skills and poverty reduction. 

Table A14.1: Social Scoreboard for Malta 

Update of 27 April 2023. 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 2023. 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  Maltese  labour  market  is  performing 
well,  but  the  employment  rate  of  women, 
especially  those  aged  55-64,  is  low.  On  the 
back  of  strong  economic  growth  in  2021  and 
2022,  Malta’s  employment  rate,  which  was 
already  high  before  the  COVID-19  crisis,  had 
surpassed  pre-crisis  levels  as  early  as  Q3-2021 
(79.2%) and further improved after that (82.1% in 

55 

Q4-2022  vs  74.9%  in  the  EU).  However,  the 
gender  employment  gap  remains  one  of  the 
widest  in  the  EU  (13.1 percentage  points  (pps)  vs 
EU 10.6 pps in 2022) despite halving over the last 
decade  (from 28.6 pps in 2013).  The employment 
rate  of  women  aged  55-64  remains  particularly 
low (43.3% vs EU 56.3% in 2021). Over time, this 
has led to the widest gender pension gap in the EU 
for  people  aged  65-74  (45.7%  in  2021).  The 
disability  employment  gap  is  also  above  the  EU 
average 
(27 pps  vs  23 pps)  despite  some 
improvements  since  2020  (29.4 pps).  In  response 
to these challenges, the European Social Fund Plus 
(ESF+) will support active labour market and active 
inclusion measures, with a special focus on young 
people and persons with disabilities. The ESF+ will 
also  finance  actions,  studies  and  campaigns  to 
foster gender equality in the labour market. These 
will give  women the  resources,  skills,  and  support 
to  be  active  citizens  and  reduce  the  gender  pay 
gap.  These  measures,  together  with  the  recovery 
and  resilience plan  (RRP)  reforms  targeting  senior 
female  workers  and 
the  gender 
employment  gap,  should  help  Malta  progress 
towards  its  national  target  of  at  least  84.6%  of 
adults being employed by 2030. 

reducing 

Insufficient  educational  outcomes, 
low 
participation  in  learning  among  low-skilled 
adults as well as skills gaps and shortages in 
many sectors pose interlinked challenges. The 
early school leaving rate (10.1% in 2022), though 
on  a  long-term  downward  trend,  remains  higher 
than the EU average (9.6%), and this increases an 
already large pool  of low-skilled adults (33.1% at 
age  15-64  in  2022).  Among  low-skilled  adults 
aged 18-64, only 3.8% (EU 13.3%) participated in 
learning activities (over the past 4 weeks) in 2022, 
against  21.3%  of  the  medium-skilled  and  23.9% 
of those with a tertiary education. While 61.2% of 
adults have at least basic digital skills in Malta (EU 
54%), the differences by skill levels are significant. 
Of  those  with  less  than  an  upper  secondary 
education,  43.7%  have  at  least  basic  or  above 
basic  digital  skills  (EU  28.4%),  against  60.2%  of 
the  medium-skilled  and  92.8%  of  those  with  a 
higher  education 
Insufficient  overall 
level. 
outcomes,  especially  related  to  basic  skills  (see 
also  Annex  15),  hinder  efforts  to  tackle  persisting 
in 
labour  shortages  and  skills  mismatches 
different  sectors 
financial 
services, and manufacturing). Thus, there is further 

(including  digital, 

10.161.237.213.15.0381.12.91131.7120.323.226.2272.7240.1Critical situationTo watchWeak but improvingGood but to monitorOn averagePolicy areaHeadline indicatorEqual opportunities and access to the labour marketEarly leavers from education and training(% of population aged 18-24, 2022)Share of individuals who have basic or above basic overall digital skills (% of population aged 16-74, 2021)Youth NEET rate(% of population aged 15-29, 2022)Gender employment gap(percentage points, 2022)Income quintile ratio(S80/S20, 2021)Dynamic labour markets and fair working conditionsEmployment rate(% of population aged 20-64, 2022)Unemployment rate(% of active population aged 15-74, 2022)Long term unemployment(% of active population aged 15-74, 2022)GDHI per capita growth                                                              (2008=100, 2021)Social protection and inclusionAt risk of poverty or social exclusion rate                                            (% of total population, 2021)At risk of poverty or social exclusion rate for children                       (% of population aged 0-17, 2021)Impact of social transfers (other than pensions) on poverty reduction (% reduction of AROP, 2021)Disability employment gap(percentage points, 2021)Housing cost overburden(% of total population, 2021)Children aged less than 3 years in formal childcare(% of population under 3-years-old, 2021)Self-reported unmet need for medical care(% of population 16+, 2021)Better than averageBest performers 
 
 
 
   
 
 
scope  for policy action, in particular to strengthen 
the  quality  and  inclusiveness  of  education  and 
training.  To  foster  progress  in  this  area,  the  ESF+ 
will  strongly  support:  (i)  innovative  teaching  and 
learning  tools,  including  digital  technologies;  (ii) 
capacity building for educators; (iii) new vocational 
pathways;  (iv)  preventive  and  active  measures 
across the education cycle; (v) inclusive education 
support;  and  (vi)  higher  education  and  lifelong 
learning  in  key  and  emerging  sectors.  Together 
with RRP reforms aimed at skills development and 
early  school  leaving  prevention  and  reduction, 
these will contribute to improving the situation and 
progress  towards  the  national  2030  target  of  at 
least  57.6%  of  adults  participating  in  learning 
each year. 

Table A14.2: Situation of Malta on 2030 
employment, skills and poverty reduction targets 

(1) Adult Education Survey, adults in learning in the past 12 
months 
(2) The EU headline target is expressed as a reduction in the 
number of persons at risk of poverty or social exclusion 
(AROPE), reference year 2019 
(3) Malta expresses its national target as a reduction of the 
share of persons at risk of poverty or social exclusion (AROPE) 
by 3.1 percentage points, reference year 2019 
Source: Eurostat, DG EMPL 

Poverty  indicator  results  are  below  the  EU 
average  in  general  but  remain  high  for 
specific vulnerable groups. The share of people 
at risk of poverty or social exclusion was 20.3% in 
2021,  close  to  the  EU  average  (21.7%).  However, 
this  was  much  higher  for  non-EU  nationals 
(30.4%),  low-skilled  adults  (30.3%),  people  aged 
65 and over (29.9%), and persons with disabilities 
(33.4%).  Income  inequalities,  measured  by  the 
ratio of the average income of the 20% richest to 
the  20%  poorest  (S80/S20),  increased  between 
2020  and  2021  by  0.34 pps  to  reach  5.03 pps 
(above  the  EU  average),  hence  flagging  Malta  as 
‘to watch’ on the Social Scoreboard. The impact of 
social  transfers  on  reducing  poverty  improved 
substantially  in  2021  but  is  also  flagged  as  ‘to 
watch’  due  to  being  the  sixth  lowest  in  the  EU  at 
26.2%  (EU  average  37.1%).  The  share  of  children 
at  risk  of  poverty  or  social  exclusion  (23.2%  in 
2021)  remains  below  the  EU  average  of  24.4%. 

However, some groups of children are at a greater 
risk of poverty or social  exclusion, including those 
with single (52.6%) or low-skilled parents (51.5%). 
Free childcare is available to children with parents 
in  employment  or  education.  Nevertheless,  the 
share of children aged less than 3 years in formal 
childcare  is  flagged  as  ‘to  watch’  on  the  Social 
Scoreboard due to a low level at 24% (EU average: 
36.2%)  and  a  substantial  decrease  in  2021  (by 
5.7 pps), which is one of the biggest in the EU (110). 
Malta continues to have one of the lowest housing 
cost  overburden  rates  in  the  EU  (2.7%  vs  EU 
average  8.3%).  The  indicator  has  more  than 
doubled  since  2015,  reflecting  the  tightening  of 
the rental market brought about by changes in the 
country’s demographics. The Maltese population is 
generally  in  good  health  (self-perceived  health 
was good or very good for 73% of the population 
in  2021  vs  the  EU  average  of  69%).  In  addition, 
life expectancy in the country is among the highest 
in the EU. Disparities in self-reported good or very 
good  health  by  income  (30.6 pps  difference  in 
2021  between  the  first  and  the  fifth  income 
quintile)  are  much  higher  than  the  EU  average 
(20.2 pps).  At  the  same  time,  unmet  needs  for 
medical care are relatively low, with little variation 
between  income  groups.  The  government  plans 
ESF+ measures and RRP reforms and investments 
in  healthcare  and  long-term  care  infrastructure 
and workforce, as well as ESF+ measures to boost 
social  protection  systems  and  address  children’s 
needs.  These  will  all  help  Malta  make  progress 
towards  its  2030  target  of  reducing  the  share  of 
persons  at  risk  of  poverty  or  social  exclusion  by 
3.1 pps compared to the 2019 value. 

(110) This result may be explained by the COVID-19 pandemic and 
the health restrictions in place in childcare centres; these 
may have affected provision and participation. See: 
Education and training monitor 2022: Malta. 

56 

IndicatorsLatest dataTrend            (2015-2022)National target by 2030EU target by 203081.1(2022)32.8(2016)0(2021)Poverty reduction2,3  (thousands)-3-15 000Employment (%)8578Adult learning1 (%)5860 
 
     
 
                                                 
ANNEX 15: EDUCATION AND TRAINING 

This  Annex  outlines  the  main  challenges  for 
Malta’s  education  and  training  system  in  light  of 
the  EU-level 
targets  and  other  contextual 
indicators  under  the  European  Education  Area 
strategic framework, based on the 2022 Education 
and Training Monitor. 

Participation  in  early  childhood  education 
and  care  (ECEC)  continues  to  decrease.  The 
proportion  of  children  over  3  in  early  childhood 
education stood at 89.1% in 2020, compared with 
an  EU  average  of  93%  and  below  the  EU-level 
target  of  96%  set  for  2030.  The  rate  has 
decreased by 7.8 pps since 2015. 

Efforts  to  ensure  high  quality  ECEC  are 
underway.  In  the  2022/23  school  year,  after 
being put on hold due to the COVID-19 pandemic, 
implementation  of  the  reform  of  the  learning 
outcomes framework has restarted. As part of this, 
teacher  training  on  the  new  curriculum  for  early 
years  pupils  also  resumed.  The  new  national 
standards  for  private  and  public  childcare  centres 
for  children  below  3  years  have  been  in  place 
since October 2021. 

Although  still  slight  above  the  EU  average, 
Malta  has  significantly  reduced  its  rate  of 
early  leaving  from  education  and  training 
(ELET). It has decreased by 11.3 pps since 2010; 
the  decrease  is  more  significant  for  boys  (-
16.6 pps)  than  for  girls  (-5.7 pps).  This  positive 
trend  is  the  result  of  a  series  of  measures 
undertaken  in  recent  years.  For  example,  with  the 
support  of  EU  funds,  Malta  has  strengthened 
vocational education and training to provide pupils 
with  an  alternative  to  the  more  academically 
oriented  school  programmes.  Efforts  to  curb  the 
ELET  rate  continue.  The  data  warehouse  project 
envisaged  in  the  national  recovery  and  resilience 
plan will collect data of students in public schools, 
covering  their  whole  educational  career.  It  may 
help  in  investigating  national  specificities  of  the 
phenomenon  of  early  school  leaving,  facilitating 
more targeted actions to support children early on, 
and to address gaps in the current provision. 

Ensuring  high  teaching  quality  is  key  to 
addressing  the  basic  skills  challenge.  The 
proportion  of  15-year-olds  underachieving  in  all 
three  PISA  (Programme  for  International  Student 
Assessment)  domains  combined  is  among  the 
highest  in  the  EU  (22.6%  vs  13.2%)  and  it  is 
particularly  high  among  disadvantaged  pupils 
(36.7%  vs  23.5%  at  EU  level).  Implementation  of 

level.  Nevertheless, 

the  2017 
learning  outcomes  framework  has 
the 
started  at  primary 
government plans to revise the curriculum to react 
to  changing  labour  market  needs.  In  addition,  the 
2018  Teaching  and  Learning  International  Survey 
highlights  that  a  high  proportion  of  teachers 
(60.7%)  consider 
receive 
sufficient  incentives  for  continuing  professional 
development (CPD) (111). Participation in CPD is not 
required  for  career  progression.  Schools  are  not 
required  to  develop  a  CPD  plan  to  balance 
individual  and  organisational 
learning  needs, 
improve teaching quality and help to better target 
teacher and student needs. 

they  do  not 

that 

investments 

The  take-up  of  vocational  education  and 
training  (VET)  at  upper  secondary  level 
remains below the EU average. Despite a high 
employment rate of recent VET graduates (89.0% 
vs  75.7%  at  EU  level  in  2020)  and  recent 
infrastructure  and 
significant 
quality,  the  share  of  learners  enrolled  in  2020  in 
upper secondary VET in Malta remained at 27.6%, 
(27.7%  in  2019  and  28.5%  in  2018)  still  well 
below the EU average (48.7% in 2020). The share 
of  VET  graduates  benefiting  from  exposure  to 
work-based 
their  vocational 
education and training was 52.7% in 2022, below 
the EU average (60.1%). 

learning  during 

in 

rate  for 

the  Maltese  population 

Tertiary  educational  attainment  remained 
stable  in  2022.  The  proportion  of  25-34-year-
olds  with  tertiary  education  stood  at  42.4%  in 
2022.  The  attainment  rate  among  the  EU-born 
population  from  outside  Malta  (51.5%)  surpasses 
(43.0%).  A 
that  of 
recent 
relatively  high  employment 
graduates  continues  to  be  a  key  factor 
in 
attracting qualified people to Malta. The proportion 
of  people  aged  between  15  and  64  with  a  low 
level of education in 2022, while decreasing, stood 
at  33.1%  compared  with  24.9%  for  the  EU. 
Several  measures  are  planned 
increase 
participation  in  adult  learning,  particularly  for  the 
low-skilled,  including  measures  supported  by  the 
European  Social  Fund  Plus.  Malta’s  recovery  and 
resilience  plan  includes  starting  an  ‘e-college’,  a 
digital  learning  platform  for  adults  that  includes 
mentoring and guidance services, with a particular 
focus on the low-skilled. 

to 

(111) European Commission (2019), Education and Training 

Monitor 2019 – Malta. 

57 

 
 
                                                 
 
Table A15.1: EU-level targets and other contextual indicators under the European Education Area 
strategic framework 

Source: (1,3,4,5,7,8,9,10,11) = Eurostat; 2 = OECD (PISA); 6 = European Commission (Joint Research Centre). Notes: Data is not 
yet available for the remaining EU-level targets under the European Education Area strategic framework, covering 
underachievement in digital skills and participation of adults in learning. The equity indicator shows the gap in the share of 
underachievement in reading, mathematics and science (combined) among 15-year-olds between the lowest and highest quarters 
of socio-economic status. 

Enrolments  in  tertiary  programmes  continue 
to  increase.  However,  a  better  alignment  with 
labour  market  needs  may  help  address  skills 
shortages  and  future  needs.  Entrants  at  master’s 
level to ICT fields only accounted for 2.7% (112) of 
total  new  entrants  in  2020,  while  it  was  4.2%  in 
2016.  This  is  despite  the  fact  that  the  share  of 
firms  reporting  hard-to-fill  vacancies  for  jobs 
requiring  ICT  specialist  skills  is  above  the  EU 
average  (66.1%  vs  55.4%  in  2020).  Malta  is 
working  on  the  National  Strategic  Action  Plan  for 
Further  and Higher  Education  2022-2030.  It  aims 
at  achieving  more  synergies  among  education, 
research and business. 

(112) About 19% of new ICT entrants were women in 2020, a 
decrease of about 10 pps compared with 2016 data.  

58 

96%96.9%91.9%89.1%202093.0%2020Reading< 15%35.6% 20.0%35.9%201822.5%2018Mathematics< 15%29.1% 22.3%30.2%201822.9%2018Science< 15%32.5% 21.1%33.5%201822.3%2018< 9 %16.3%11.0%10.1% 9.6%Men19.2%12.5%11.7%11.1%Women13.0%9.4%8.4%8.0%Cities20.8%9.6%13.2%8.6%Rural areas12.0%u12.2%:u10.0%Native16.5%10.0%6.1%8.3%EU-born:u20.7%:u20.3%Non EU-born:u23.4%28.8%22.1%6Equity indicator (percentage points)::25.4201819.320187Exposure of VET graduates to work based learningTotal ≥ 60% (2025) : :52.7%60.1%45%31.9%36.5%42.4%42.0%Men27.3%31.2%37.8%36.5%Women36.9%41.8%47.9%47.6%Cities31.9%46.2%38.5%52.2%Rural areas29.8%26.9%49.7%30.2%Native31.5%37.7%43.0%43.0%EU-born54.5%u32.7%51.5%39.5%Non EU-born31.0%27.0%36.2%35.7%13.7% 38.3%15.7%202039.2%2020Tertiary educational attainment (age 25-34)8Total8By gender9By degree of urbanisation10By country of birth11Share of school teachers (ISCED 1-3) who are 50 years or over1Participation in early childhood education (age 3+)2Low achieving 15-year-olds in:Early leavers from education and training (age 18-24)3Total3By gender4By degree of urbanisation5By country of birth20152022IndicatorTargetMaltaEU27MaltaEU27 
                                                 
 
   
 
ANNEX 16: HEALTH AND HEALTH SYSTEMS 

A  healthy  population  and  an  effective, 
accessible  and  resilient  health  system  are 
prerequisites  for  a sustainable  economy and 
society.  This  Annex  provides  a  snapshot  of 
population health and the health system in Malta.  

Life  expectancy  in  Malta  is  higher  than  the 
EU  average  and  has  partially  rebounded 
after  it  fell  in  2020.  Life  expectancy  slightly 
increased  in  2021,  despite  an  increase  in  the 
reported  number  of  COVID-19  deaths  between 
2020  and  2021 (113).  Malta  fares  comparatively 
well  in  avoiding  deaths  from  treatable  causes. 
Cardiovascular  diseases  and  cancer  are  the 
leading 
has 
comparatively  high  mortality  rates  from  diabetes 
and  ischaemic  heart  disease  which  correspond 
with  the  high  prevalence  of  overweight  and 
obesity. Malta has the highest obesity rates in the 
EU, also amongst children; the topic is high on the 
public health agenda. 

of  mortality.  Malta 

causes 

Graph A16.1: Life expectancy at birth, years 

Source: Eurostat 

Health spending relative to GDP significantly 
increased  from  2019  to  2020  and  is  now 
near  the  EU  average.  This  is  in  line  with  the 
upward trend in all Member States in 2020. In the 
case  of  Malta,  this  increase  results  from  both  a 
sharp  GDP  contraction  (more  than  8%,  compared 
to  5.7%  for  the  EU  overall)  and  an  increase  of 
healthcare  spending  in  nominal  terms.  The  share 
of public spending is historically low (but increased 
from  2019  to  2020).  Household  out-of-pocket 
payments  are  among  the  highest  in  the  EU 
(especially for private primary and outpatient care 
and  for  medicines).  Nevertheless,  Malta  reports 
one  of  the  lowest  levels  of  self-reported  unmet 
needs in the EU (see Annex 14). 

(113) Based on data provided directly by Member States to ECDC 
under the European Surveillance System (data current as of 
13 April 2023) 

59 

Spending  on  outpatient  care  is  low  in  relation  to 
total healthcare spending, also compared to other 
Member  States.  Strengthening  primary  care  in 
general  and  also  shifting  treatment  of  chronic 
diseases  from  cost-intensive  care  in  hospitals  to 
primary  care  and  community-care  settings  are 
ongoing  challenges.  These  are  also  addressed  by 
Malta’s European Structural and Investment Funds 
programmes.  Public  spending  on  health 
is 
projected  to  increase  by  2.6  percentage  points 
(pps) of GDP by 2070 (compared to 0.9 pps for the 
EU  overall),  raising  long-term  fiscal  sustainability 
concerns (see Annex 21).  

Graph A16.2: Projected increase in public 
expenditure on healthcare over 2019-2070 

AWG reference scenario 
Source: European Commission / EPC (2021) 

Spending on preventive care remained stable 
during  the  pandemic,  while  most  other 
countries  raised  this  expenditure  drastically. 
Across  the  EU,  this  increase  was  primarily  driven 
by  spending  on  disease  detection,  surveillance, 
control  and  response  programmes  as  part  of  the 
public  health  response  to  COVID-19.  In  2020, 
spending  on  prevention  in  Malta  amounted  to 
1.5% of total spending on healthcare (compared to 
3.4% for the EU overall).               

Malta has implemented a number of reforms 
to  tackle  shortages  of  health  workers.  The 
numbers of doctors and nurses per population are 
near the EU average and have been on the rise in 
the last few years. However, there are shortages in 
certain  specialties  and  Malta  relies  on  foreign-
trained  nurses, especially in hospitals. In the past, 
shortages have been exacerbated by an increased 
number  of  nurses  leaving  Malta  to  work  in  other 
that  offer  more 
(English-speaking)  countries 
attractive  working 
addition, 
demographic  change  is  estimated  to  be  more 
in  most  other  EU 
severe 

conditions. 

in  Malta 

than 

In 

82.682.482.582.982.382.580.980.981.081.380.480.1201620172018201920202021MaltaEU6.65.40.92.60246810EUMalta% of GDP20192070increase 
 
            
                                                 
        
  
Table A16.1: Key health indicators 

Note: The EU average is weighted for all indicators, except for (*) and (**), for which the EU simple average is used. The simple 
average for (*) uses data for 2020 or most recent year if former not available. Doctors' density data refer to practising doctors in 
all countries except EL, PT (licensed to practice) and SK (professionally active). Nurses' density data refer to practising nurses in all 
countries except FR, PT, SK (professionally active) and EL (nurses working in hospitals only). 
Source: Eurostat; except: ** ECDC 

countries (114).  Therefore,  having  an  appropriate 
number of health workers is even more relevant to 
ensuring that the health system is accessible and 
resilient in the long run. 

Through  its  recovery  and  resilience  plan 
(RRP), Malta plans to invest EUR 69.9 million 
(22.1%  of  the  plan’s  total  value) 
in 
healthcare.  Investments  under  the  RRP  focus 
mainly  on  setting  up  a  Blood,  Tissue  and  Cell 
Centre,  digitalisation  and  new  technologies.  But 
there  are  also  measures  that  aim  to  tackle  some 
of  the  above-mentioned  challenges,  such  as 
issues  (including  a  bespoke 
workforce-related 
workforce  planning  tool  and  better  integration  of 
foreign  health  workers)  and  the  prevalence  of 
obesity among children. 

(114) Source: https://economy-

finance.ec.europa.eu/system/files/2021-10/ip148_en.pdf. 

60 

20172018201920202021EU average (latest year) Treatable mortality per 100 000 population (mortality avoidable through optimal quality healthcare)85.191.885.089.3NA91.7 (2020)Cancer mortality per 100 000 population221.1237.3203.5212.5NA242.2 (2020)Current expenditure on health, % GDP 8.78.69.210.8NA10.9 (2020)Public share of health expenditure, % of current health expenditure62.963.562.566.7NA81.2 (2020)Spending on prevention, % of current health expenditure 1.31.31.51.5NA3.4 (2020)Acute care beds per 100 000 population318319312319NA387.4 (2019)Doctors per 1 000 population *4.04.04.04.2NA3.9 (2020)Nurses per 1 000 population *8.07.87.78.0NA8.3 (2020)Consumption of antibacterials for systemic use in the community, daily defined dose per 1 000 inhabitants per day (total consumption for CY and CZ) **19.818.018.714.414.114.5 (2021) 
 
                                                 
 
   
 
ANNEX 17: ECONOMIC AND SOCIAL PERFORMANCE AT REGIONAL LEVEL 

This  Annex  showcases  the  economic  and 
social  territorial  dynamics  in  Malta,  providing 
an  update  on  the  economic,  social  and  territorial 
cohesion  in  Malta  compared  with  the  EU  as  a 
whole  and  the  main  regional  economic  recovery 
challenges. 

Malta  rapidly  recovered  from  the  COVID-19 
pandemic. Despite the strong impact of Covid-19 
with  the  drop  in  GDP  per  capita  (in  PPS)  from 
100%  in  2019  to  97%  of  the  EU-27  average  in 
2020,  Malta’s  mitigating  measures  cushioned  the 
shock with GDP per capita (in PPS) reaching 102% 
of  the  EU-27  average 
in  2021.  Significant 
disparities  remain:  GDP  per  capita  on  the  main 
island  is  105%  of  the  EU-27  average  but  only 
65%  on  Gozo  and  Comino.    Data  unavailability 
does  not  permit  to  analyse  internal  disparities  in 
the island of Malta. 

The labour market continues to perform well 
in Malta, but marked territorial disparities in 
labour productivity remain. Despite the COVID-
19  outbreak,  Malta’s  employment  rate  continued 
to  improve  in  2020  for  ages  20-64  (77.3%)  and 
2021 (79.1%). The unemployment rate of 3.5% in 
2021 remained significantly below the EU average 
(7%).  Labour  productivity  (measured  as  gross 
value  added  per  person  employed)  was  91%  of 
the  EU  average  on  the  main  island  in  2020  and 
69%  on  Gozo  and  Comino,  and increased to  96% 
and  74%  respectively  in  2021  –  thus  highlighting 
persisting  territorial  disparity  among  the  Maltese 
islands.  

in  R&D 

limited. 
Investment 
Investments  in  R&D  as  a  percentage  of  GDP  was 
just 0.7% in 2020, and only 0.4% in the business 

remains 

in 

the 

2022 

enterprise  sector.  This  is  far  below  the  2%  EU 
target  (see  Annex  11).  The  underinvestment  in 
terms  of  R&D  in  the  business  enterprise  sector  is 
also 
Regional 
reflected 
Competitiveness 
the  Business 
Index  under 
Sophistication Pillar, where Malta scores below EU 
average  with  a  score  of  90.  In  2021,  6.1%  of 
employment  was  in  high-technology  sectors  and 
50.2% of employment was in knowledge-intensive 
services (both  figures  are above  the  EU  average). 
The  2021-2027  EU  funds  will  help  addressing 
Malta's low innovation performance by supporting 
supportive 
R&I 
environment  for  R&I  in  the  public  and  private 
sectors.  

capacity 

creating 

and 

a 

Graph A17.1: GDP per capita (2021), productivity 
(2021) and GDP per capita growth (2011-2020) - 
Malta 

Source: EUROSTAT, European Commission 

Malta  continues  to  reduce  greenhouse  gas 
(GHG) emissions, with a 41% cut in terms of 
tCO2  equivalent  per  capita  in  1990-2021.  It 
still  has  a  long  way  to  go  to  meet  its  2030  and 
target,  however.  The 
2050  GHG 

reduction 

Table A17.1: Selected indicators at region level in Malta 

Source: EUROSTAT, European Commission 

61 

0204060801001200.000.501.001.502.002.503.003.50European UnionMalta (National)Malta (NUTS3)Gozo and Comino(NUTS3)GDP per head in 2020 (PPS, % of EU average), rhsProductivity in 2020 (GVA per person employed, % of EU average), rhsGDP per head , 2011-2020, annual average growth rate, lhsNUTS region nameGDP per head (PPS) (2021)Employment rate, ages 20-64 (2021)Unemployment rate (2021)Productivity (GVA (PPS) per person employed) (2021)R&D expenditure (2020)R&D expenditure in the business enterprise sector (BERD) 2020Employment in high-technology sectors (2021)Employment in knowledge-intensive services (2021)Index, EU27 = 100% of population aged 20-64% of active populationIndex, EU27 = 100% of GDP% of GDP% of total employment% of total employmentEuropean Union100.073.17.0100.02.31.54.841Malta102.079.13.595.10.70.46.150.2Malta105.096.2Gozo and Comino/Għawdex u Kemmuna65.073.7 
 
  
 
  
 
 
 
2021-2027  EU  funds  will  support  Malta  in  its 
transition to a low-carbon economy, including with 
investments 
renewable 
in  energy  efficiency, 
energy  and  sustainable  mobility.  Particularly,  the 
Just  Transition  Fund’s 
the 
maritime  sector,  entailing  the  connection  of 
vessels  to  onshore  electricity  power  supply  whilst 
berthing at Grand Harbour and Malta Freeport, will 
further strengthen Malta’s decarbonisation efforts, 
accompanying the country in its transition process 
towards climate-neutrality. 

interventions 

in 

62 

 
MACROECONOMIC STABILITY 
ANNEX 18: KEY FINANCIAL SECTOR DEVELOPMENTS 

growth  in  resident  lending  was  mortgage  activity, 
with  the  value  of  new  mortgage  drawdowns  up 
5.4% in the first half of 2022 compared with the 
first  half  of  2021.  House prices  continued  to  rise, 
up  6.3%  in  the  third  quarter  of  2022  compared 
with the third quarter of 2021. 

The  Maltese  financial  sector appears overall 
resilient.  The  European  Systemic  Risk  Board 
(2022)  has  identified  several  key  vulnerabilities 
including  elevated  mortgage-credit  growth  and 
elevated  household  indebtedness.  Against  this 
background,  the  current  limits  on  loan-to-value 
ratios,  debt-to-income  ratios,  and  loan  maturities 
(together  with  the  measures  allowed  by  Article 
124  of  the  Capital  Requirements  Regulation)  are 
appropriate and sufficient. 

Graph A18.1: Evolution of credit activity by sector 

Malta  has  a  predominantly  bank-based 
financial  sector,  with  a  high  concentration 
rate.  The  concentration  of  the  banking  sector  is 
significant, as the five largest banks held 75.6% of 
the  sector’s  total  assets  at  the  end  of  2021.  The 
ratio of total assets to the country’s GDP continues 
to  narrow  and  stood  at  257.8%  in  Q3-2022. 
Malta’s  specificity  is  its  role  as  an  international 
banking centre. A sizable part of its banking sector 
is  composed  of  foreign 
institutions  with  no 
exposure  to  the  domestic  economy.  However,  the 
share  of  domestic  credit  institutions  has  been 
continuously  increasing,  and  these  institutions 
accounted  for  62.7%  of  total  banking-sector 
assets in Q3-2022, compared to 33.5% in 2015.  

the 

Maltese  banks  have  performed  solidly 
despite 
adverse  macroeconomic 
developments  that  followed  the  pandemic. 
Banks  maintained  their  capital  levels  well  above 
the  regulatory  requirements  during  the  COVID-19 
pandemic,  in  part  supported  by  the  temporary 
restriction  on  dividend  pay-outs.  Asset  quality 
deteriorated  only  moderately  due  to  government 
support  measures,  with 
ratio  of  non-
performing  loans  declining  to  2.6%  in  Q3-2022. 
The  non-performing-loan  ratio  for  core  domestic 
banks stood at 2.9% in the same period, less than 
in  2019  when  it  stood  at  3.2%.  The  increase  in 
interest  rates  and  the  erosion  of  disposable 
income  is  likely  to  negatively  affect  the  debt-
servicing  capacity  of  borrowers  and  consequently 
the banks’ asset quality. 

the 

The  profitability  of  Maltese  banks  took  a 
large  hit  in  2020,  but  banks  subsequently 
improved  their  profitability.  The  improvement 
in  profits  stemmed  from  higher  earnings  from 
intermediation,  fees,  and  commissions.  However, 
the  profitability  for  the  domestically  relevant 
banks was lower in the first half of 2022 than in 
2021,  and  this  profitability  could  be  further 
pressured  by  lower  credit  volumes  or  possible 
additional  provisioning. Direct  exposures to Russia 
and Ukraine were relatively limited, but the indirect 
effects  stemming  from  the  worsening  global 
macroeconomic outlook and high inflation affected 
bank  balance  sheets  and  bank  performance. 
Nevertheless, lending activity in the domestic core 
banks picked up in the first half of 2022 for both 
households (up 3.8% compared to the first half of 
2021)  and  businesses  (up  3.1%  compared  to  the 
first  half  of  2021).  The  main  driver  behind  the 

Source: ECB. 

FATF  acknowledged  in June  2022  that Malta 
had  strengthened  its  system  for  anti-money 
laundering  and  countering  the  financing  of 
terrorism (AML/CFT) and removed Malta from 
its ‘grey list’. At its June 2022 plenary, the FATF 
decided that Malta had made significant progress 
in  addressing  the  strategic  AML/CFT  deficiencies 
previously  identified  by  the  FATF  and  included  in 
its  action  plan.  As  a  result,  Malta  is  no  longer 
subject to the FATF’s increased monitoring process 
and  will  work  with  FATF  regional  partners  to 
continue  strengthening 
regime. 
Furthermore,  Malta  has  implemented  key  reforms 
in  the  area  of  beneficial  ownership  information 
and financial intelligence units. These reforms are 
also part of Malta’s commitments under the RRP.  

its  AML/CFT 

63 

-20-15-10-50510152020092010201120122013201420152016201720182019202020212022Total privateNFCHH% 
 
 
  
 
Table A18.1: Financial Soundness Indicators 

(1) Last data: Q3 2022.  
(2) Data is annualized. 
Source: ECB, Eurostat, S&P Global Capital IQ Pro. 

Malta  has  not  yet  tapped  into  the  growing 
demand  for  ESG  (Environmental,  social,  and 
corporate  governance)  compliant  products. 
So  far,  there  have  been  no  issuances  of  green 
bonds  nor  has  a  green  instrument  been  listed  on 
the Malta Stock Exchange. The findings of a recent 
Maltese  central-bank  study  on  green  finance 
suggest  that  the  main  issue  is  an  informational 
mismatch  between  investors  and  issuers.  The 
study  recommends  that  the  government  kickstart 
the  new  market  by  issuing  its  own  green  bonds 
and implementing tax incentives. 

Domestically  relevant  insurers  continue  to 
operate  on  healthy  capital  and  liquidity 
levels, although risks remain. Only 9 out of the 
71  licensed  insurance  companies  underwrite  risks 
that  are  prevalent  in  Malta  and  are  classified  as 
domestically  relevant.  The  assets  of  these  9 
licensed insurance  companies  fell  in  the  first  half 
of  2022  by  9.3%  compared  to  the  first  half  of 
2021 to EUR 3.7 bn, equivalent to 23.6% of GDP. 
Their profitability also fell in the first half of 2022, 
particularly  in  the  non-life  sector,  due  to  rising 
claims  and  operational  expenses.  By  June  2022, 
the  solvency  ratios  of  the  domestically  relevant 
insurance companies had fallen compared to June 
2021, but they remain solid at 205.3% for the life 
sector  and  241.5%  for  the  non-life  sector.  As  is 
the  case  with  other  counties,  the  uncertain 
external  economic  outlook  and  high  inflation  may 
generate 
insurance 
businesses in Malta. 

short-term 

losses 

for 

of 

domestically 

relevant 
The  assets 
investment funds fell in the first 6 months of 
2022.  The  assets  of  38  funds  classified  as 
domestically  relevant  decreased  by  13.5%  to 
EUR 1.6  bn  (equivalent  to  10.3%  of  GDP)  in  the 
first 6 months of 2022 compared with the first 6 
months  of  2021.  This  fall  was  mainly  due  to  the 
price  declines  in  the  equity  and  bond  markets. 
Those  investment  funds  remain  highly  liquid  with 
low  leverage.  Because  bonds  account  for  almost 
two-thirds  of  their  total  assets,  the  continued 
increase in interest rates may put further pressure 
on  asset  prices  and  might  provoke  a  rebalancing 
of their portfolio structure towards equities. 

64 

201720182019202020212022EUMedianTotal assets of the banking sector (% of GDP)402.4342.8294.8308.8290.1257.8276.8207.9Share (total assets) of the five largest banks (%)80.977.575.174.875.6--68.7Share (total assets) of domestic credit institutions (%)142.147.853.558.761.762.7-60.2NFC credit growth (year-on-year % change)14.83.52.02.7-6.46.2-9.1HH credit growth (year-on-year % change)6.57.58.75.89.79.5-5.4Financial soundness indicators:1        - non-performing loans (% of total loans)3.13.13.23.63.02.61.81.8- capital adequacy ratio (%)21.122.323.425.124.523.218.619.8- return on equity (%)27.25.26.00.33.51.76.16.6Cost-to-income ratio (%)140.640.550.349.363.848.160.651.8Loan-to-deposit ratio (%)161.475.257.459.656.168.788.678.0Central bank liquidity as % of liabilities0.50.20.10.62.40.8-2.9Private sector debt (% of GDP)124.3121.5122.9137.7129.2--120.7Long-term interest rate spread versus Bund (basis points)96.499.092.599.287.3126.7-93.3Market funding ratio (%)32.832.935.834.437.8-50.840.0Green bonds issued to all bonds (%)------3.92.31-34-1011-1718-2425-27Colours indicate performance ranking among 27 EU Member States. 
 
 
   
 
ANNEX 19: TAXATION  

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

information  on 

Malta’s  tax  revenues  are  relatively  low  in 
relation to its GDP, but Malta remains highly 
reliant on corporate income taxes. Table A19.1 
shows  that  Malta’s  tax  revenues  as  a  percentage 
of  GDP  remained  relatively  stable  at  30.5%  and 
considerably below the EU aggregate of 40.6% in 
2021.  Its  tax  system  relies  almost  equally  on 
labour taxation and growth-friendly taxes. In 2021, 
Malta's  labour  tax  revenues  as  a  percentage  of 
GDP were, at 12.4%, well below the EU aggregate 
of  20.9%.  Both  consumption  tax  revenues  and 
environmental taxes as a percentage of GDP were 
slightly  below  the  EU  aggregate.  Corporate  taxes, 
however,  remain  the  predominant  source  of  tax 
revenues  in  Malta.  Revenues  from  property  taxes 
were  relatively  low  as  a  percentage  of  both  GDP 
and  total  tax  revenues.  Malta  does  not  have 
recurrent  property  taxes,  which  are  among  the 
taxes least detrimental to growth.  

Table A19.1: Taxation indicators 

Graph A19.1: Tax wedge for single and second 
earners as a % of total labour costs, 2022 

Second earner tax wedge assumes first earner at 100% of 
the average wage and no children 
Source: European Commission 

The labour tax burden is much lower than the 
EU  average,  but  it  is  also  less  progressive. 
Graph A19.1 shows that the labour tax wedge for 
Malta  in  2022  was  much  lower  than  the  EU 
average  for  single  people  at  50%  of  the  income 
level of the average wage and at higher levels of 
income. Second earners at a wage level of 67% of 
the  average  wage,  whose  spouses  earn  the 
average  wage,  were  also  subject  to  a  tax  wedge 
that  was  lower  than the  EU  average.  The  level  of 
progressivity, expressed by the shape of the curve, 
is below the EU average. For higher incomes than 

(1) Forward-looking effective tax rate (OECD). 
(2) A higher value indicates a stronger redistributive impact of taxation. 
(*) EU-27 simple average  
For more data on tax revenues as well as the methodology applied, see European Commission, Directorate-General for Taxation 
and Customs Union, Taxation trends in the European Union: data for the EU Member States, Iceland, Norway and United Kingdom: 
2021 edition, Publications Office of the European Union, 2021, https://data.europa.eu/doi/10.2778/843047 and the Data on 
Taxation webpage, https://ec.europa.eu/taxation_customs/taxation-1/economic-analysis-taxation/data-taxation_en. 
For more details on the VAT gap, see European Commission, Directorate-General for Taxation and Customs Union, VAT gap in the 
EU: report 2022, Publications Office of the European Union, 2022, https://data.europa.eu/doi/10.2778/109823. 
Source: European Commission, OECD. 

65 

21.925.531.029.332.720253035404550100150Tax wedge, % of total labour costsEarnings in % of the average wageSingle earner - MTSingle earner - EU averageSecond earner -  MTSecond earner -  EU average2010201920202021202220102019202020212022Total taxes (including compulsory actual social contributions) (% of GDP)30.929.829.530.537.939.940.040.6Labour taxes (as % of GDP)9.910.912.212.420.020.721.320.9Consumption taxes (as % of GDP)11.910.710.310.110.811.110.711.2Capital taxes (as % of GDP)9.18.06.97.47.18.18.08.5Total property taxes (as % of GDP)1.01.10.70.81.92.22.22.2Recurrent taxes on immovable property (as % of GDP)0.00.00.00.01.11.21.21.1Environmental taxes as % of GDP2.82.42.31.92.42.42.22.2Tax wedge at 50% of average wage (Single person) (*)18.922.122.421.721.933.932.331.932.131.7Tax wedge at 100% of average wage (Single person) (*)26.430.731.030.831.041.040.139.939.739.7Corporate income tax - effective average tax rates (1) (*)28.428.428.419.519.419.1Difference in Gini coefficient before and after taxes and cash social transfers (pensions excluded from social transfers) (2) (*)7.26.06.36.28.67.78.17.8Outstanding tax arrears: total year-end tax debt (including debt considered not collectable) / total revenue (in %) (*)113.0174.931.640.7VAT Gap (% of VAT total tax liability, VTTL)26.024.111.09.1MaltaEU-27Tax structureProgressivity & fairnessTax administration & compliance 
 
 
      
 
 
      
 
 
 
 
 
 
regressive 

taxation.  The 

the average wage, the tax wedge even decreases, 
limited 
suggesting 
progressivity of the tax system is also reflected in 
the lower impact of the tax and benefit system in 
reducing income inequality, expressed by the Gini-
coefficient,  than  the  EU  average  in  2021  (Table 
A19.1).  

Graph A19.2: Total outgoing dividends by Member 
States in % of GDP, 2021 

There is room to improve the performance of 
the tax authority in terms of tax compliance 
and  tax  administration.  In  2020,  outstanding 
tax  arrears  increased  by  61.9 percentage  points 
(pps) to 174.9% of total net revenue. This remains 
significantly  above  the  EU-27  average  of  40.7%. 
On-time filing for personal income tax improved to 
almost 90% in 2020, but almost 50% of corporate 
income tax returns were filed late and the on-time 
filing  rate  for  VAT  fell  to  61.7%  in  2020   (115).  In 
2020,  the  VAT  gap  (the  gap  between  revenues 
actually  collected  and  the  theoretical  tax  liability) 
is 
decreased  by  1.9 pps 
significantly above the EU-wide gap of 9.1%.  

to  24.1%,  which 

Source: European Commission 

Aggressive  tax  planning 
is  still  a  key 
challenge.  The  high  foreign  direct  investment 
flows and the high level of dividend (Graph A19.2), 
interest and royalty payments as a percentage of 
GDP  indicates  that  aggressive  tax  planning  is 
taking place in Malta. This is also indicated by the 
high use of special purpose entities, which account 
for  96%  and  98%  of  net  inward  and  outward 
respectively 
foreign  direct 
(compared  to  an  EU  average  of  37%  and  46%).  
While challenges remain to be addressed (e.g. non-
domiciled  company  rules;  the  citizenship  and 
the  absence  of 
residence 
withholding  taxes),  Malta's  RRP  includes  four 
reforms  that  target  aggressive  tax  planning  and 
these measures are a step in the right direction. 

schemes;  and 

investment 

(FDI) 

(115) 5711f734-en.pdf (oecd-ilibrary.org)  

66 

0%20%40%60%80%100%120%140%LUCYMTNLIECZBEHUEEBGSKPTATSELVFIROSIPLDKLTHRESELFRDEIT 
 
                                                 
  
 
 
 
 
ANNEX 20: TABLE WITH ECONOMIC AND FINANCIAL INDICATORS 

Table A20.1: Key economic and financial indicators 

(1) Domestic banking groups and stand-alone banks, EU and non-EU foreign-controlled subsidiaries and EU and non-EU foreign-
controlled branches. 
(2) Net international investment position (NIIP) excluding direct investment and portfolio equity shares.  
Source: Eurostat and ECB as of 2 May 2023, where available; European Commission for forecast figures (Spring forecast 2023). 

67 

2004-072008-122013-1920202021202220232024Real GDP (y-o-y)2.72.57.1-8.611.86.93.94.1Potential growth (y-o-y)2.83.26.34.33.25.94.54.4Private consumption (y-o-y)2.81.34.3-10.58.110.13.84.0Public consumption (y-o-y)1.03.34.515.86.92.45.03.3Gross fixed capital formation (y-o-y)6.2-1.310.2-6.610.930.4-5.03.5Exports of goods and services (y-o-y)7.77.48.0-1.66.36.43.63.0Imports of goods and services (y-o-y) 7.76.37.32.03.89.72.22.7Contribution to GDP growth:Domestic demand (y-o-y)3.31.24.9-3.57.210.91.43.2Inventories (y-o-y)-0.3-0.20.20.5-0.3-0.10.00.0Net exports (y-o-y)-0.51.52.0-5.74.9-4.02.60.9Contribution to potential GDP growth:Total Labour (hours) (y-o-y)0.50.73.22.10.52.11.41.4Capital accumulation (y-o-y)1.41.01.61.41.62.72.01.9Total factor productivity (y-o-y)0.91.41.50.81.11.11.11.1Output gap-0.1-1.12.4-9.1-1.4-0.6-1.1-1.4Unemployment rate6.96.54.74.43.42.92.92.9GDP deflator (y-o-y)2.12.32.51.61.95.24.23.1Harmonised index of consumer prices (HICP, y-o-y)2.12.91.20.80.76.15.42.8HICP excluding energy and unprocessed food (y-o-y)1.82.11.30.80.76.25.83.1Nominal compensation per employee (y-o-y)2.93.34.1-0.44.62.85.63.1Labour productivity (real, hours worked, y-o-y)1.61.81.3-3.88.62.71.11.3Unit labour costs (ULC, whole economy, y-o-y)1.62.72.512.0-3.72.13.91.3Real unit labour costs (y-o-y)-0.50.40.010.3-5.5-3.0-0.3-1.7Real effective exchange rate (ULC, y-o-y)0.30.71.47.6-4.0-1.4-1.5-2.1Real effective exchange rate (HICP, y-o-y)1.4-0.20.21.1-1.0-2.5..Net savings rate of households (net saving as percentage of net disposable income)........Private credit flow, consolidated (% of GDP)12.29.87.46.59.2...Private sector debt, consolidated (% of GDP)140.0163.7131.7137.6129.0...of which household debt, consolidated (% of GDP)46.857.750.754.752.2...of which non-financial corporate debt, consolidated (% of GDP)93.2106.080.982.976.8...Gross non-performing debt (% of total debt instruments and total loans and advances) (1)1.71.62.42.72.3...Corporations, net lending (+) or net borrowing (-) (% of GDP)........Corporations, gross operating surplus (% of GDP)29.431.336.437.3....Households, net lending (+) or net borrowing (-) (% of GDP)........Deflated house price index (y-o-y)13.5-0.93.22.23.81.2..Residential investment (% of GDP)7.44.13.44.54.64.3..Current account balance (% of GDP), balance of payments-5.3-3.84.22.21.2-5.82.42.7Trade balance (% of GDP), balance of payments-1.61.413.217.014.58.6..Terms of trade of goods and services (y-o-y)-0.10.00.70.20.0-0.10.10.1Capital account balance (% of GDP)2.31.31.20.61.01.1..Net international investment position (% of GDP)30.610.745.360.251.352.3..NENDI - NIIP excluding non-defaultable instruments (% of GDP) (2)86.8168.7216.8269.1255.6239.1..IIP liabilities excluding non-defaultable instruments (% of GDP) (2)452.3698.9465.5289.6267.7229.6..Export performance vs. advanced countries (% change over 5 years).36.313.931.719.7...Export market share, goods and services (y-o-y)-0.72.35.08.7-9.62.40.9-0.7Net FDI flows (% of GDP)-154.7-77.5-80.5-74.1-65.4-61.5..General government balance (% of GDP)-2.9-3.20.3-9.7-7.8-5.8-5.1-4.5Structural budget balance (% of GDP)..-0.8-5.3-7.1-5.5-4.6-3.9General government gross debt (% of GDP)66.866.153.052.955.153.454.856.1forecast 
 
 
 
     
 
 
 
ANNEX 21: 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  European  Commission’s  2022 
Debt Sustainability Monitor, updated based on the 
Commission’s 2023 spring forecast. 

1  -  Short-term  risks  to  fiscal  sustainability 
low  overall.  The  Commission’s  early-
are 
detection  indicator  (S0)  does  not  signal  major 
short-term  fiscal  risks  (Table  A21.2). (116)  Gross 
financing needs are expected to remain limited at 
around  12%  of  GDP  in  the  short-term  (i.e.  over 
2023-2024, although declining compared with the 
recent  peak  in  2020  (Table  A21.1,  Table  1). 
Financial  markets’  perceptions  of  sovereign  risk 
are  positive,  as  confirmed  by  the  spread  and  the 
medium-grade  ‘A2/A-/A+’  rating  that  the  three 
major 
to  Maltese 
government debt. 

rating  agencies  assigned 

2 - Medium-term risks to fiscal sustainability 
are medium overall.  

The  DSA  for  Malta  shows  that,  under  the 
baseline,  the  government  debt-to-GDP  ratio 
is  expected  to  increase  over  the  medium-
term, while remaining just below 60% of GDP 
(Graph  1). (117), (118)  The  assumed 
by  2033 
structural  primary  balance  (a  deficit  of  2.4%  of 
GDP) contributes to these developments. It seems 
fiscal  performance, 
low  compared 

to  past 

(116) The S0 is a composite indicator of short-term risk of fiscal 
stress. It is based on a wide range of macro-financial and 
fiscal variables that have proven to perform well in the past 
in detecting situations of upcoming fiscal stress.  

(117) The assumptions underlying the Commission’s ‘no-fiscal 
policy change’ baseline notably comprise: (i) a structural 
primary deficit, before ageing costs, of 2.4% of GDP as of 
2024; (ii) inflation converging linearly towards the 10-year 
forward inflation-linked swap rate 10 years ahead (which 
refers to the 10-year inflation expectations 10 years from 
now); (iii) the nominal short- and long-term interest rates on 
new and rolled over debt converging linearly from current 
values to market-based forward nominal rates by T+10; (iv) 
real GDP growth rates from the Commission 2023 spring 
forecast until 2024, followed by EPC/OGWG ‘T+10 
methodology projections between T+3 and T+10, i.e. for 
2025-2033 (on average 3.8%); (v) ageing costs in line with 
the 2021 Ageing Report (European Commission, Institutional 
Paper 142, November 2020). For information on the 
methodology, see the 2022 Debt Sustainability Monitor. 

favourable 

from  a  very 

indicating ample room for corrective action. At the 
same  time,  the  baseline  projections  up  to  2033 
benefit 
(although 
diminishing) snowball effect, notably thanks to the 
favourable  impact  of  NextGenerationEU,  with  real 
GDP  growth  at  around  3.8%  of  GDP  over  2025-
2033.  Government  gross  financing  needs  are 
expected  to  stabilise  over  the  projection  period, 
around  12%  of  GDP  in  2033,  close    to  the  level 
forecast for 2024. 

The  baseline  projection 
is  stress-tested 
against  four  alternative  scenarios  to  assess 
the  impact  of  changes  in  key  assumptions 
(Graph  1).  For  Malta,  reverting  to  historical 
trajectories under the ‘historical structural primary 
(SPB)’  scenario  would  support  debt 
balance 
reduction.  If  the  SPB  gradually  converged  to  a 
broadly  balanced  budget  (its  historical  15-year 
average), it would result in a lower projected debt-
to-  (by  around  15  pps.)  than  in  the  baseline  in 
2033. Reducing the SPB level permanently by half 
of  the  cumulative  forecast  change  under  the 
‘lower  structural  primary  balance  scenario’  would 
lead to a higher government debt-to-GDP ratio by 
2033  (about  9  pps.)  as  compared  with  the 
baseline.  A  permanent  worsening  of  the  macro-
financial  conditions,  as 
the 
‘adverse interest- growth rate differential’ scenario 
(i.e. 1 pp. higher than the baseline) would also lead 
to  higher  government  debt-to-GDP  ratio  (about  4 
pps.)  by  2033,  as  compared  with  the  baseline.  A 
temporary  worsening  of  financial  conditions,  as 
reflected  in  the  ‘financial  stress  ‘scenario  (i.e. 
temporarily  increase  of  interest  rates  by  1  pp.), 
would  provide  a  broadly  similar,  though  slightly 
higher,  public  debt-to-GDP 
ratio  by  2033 
compared with the baseline.  

reflected  under 

Additionally,  stochastic  projections  show  a 
low  risk  associated  to  these  projections 
against  plausible  unforeseen  events  (Graph 
2). (119)  These  stochastic  simulations  point  to  a 
64%  probability  of  the  debt  ratio  in  2027  being 
greater  than  in  2022,  entailing  low  risk  given  the 
initial low debt level. In addition, such shocks point 
to low uncertainty (i.e. the difference between the 
10th  and  90th  debt  distribution  percentiles) 

(118) Table 1 shows the baseline debt projections and its 

(119) The stochastic projections show the joint impact on debt of 

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.  

2000 different shocks affecting the government’s budgetary 
position, economic growth, interest rates and exchange rates. 
The cone covers 80% of all the simulated debt paths, 
therefore excluding tail events. 

68 

 
 
                                                 
                                                 
 
 
the  COVID-19 

self-employed  during 
crisis. 
However, this risk remains limited due to relatively 
low  take-up.  On  the  other-hand,  risk-mitigating 
factors  include  Malta’s  positive  net  international 
investment  position,  the 
lengthening  of  debt 
maturity in recent years, relatively stable financing 
sources (with a diversified and large investor base) 
a  well-capitalised  banking  sector  with  a  strong 
liquidity position and the currency denomination of 
debt. In addition, the structural reforms under the 
NGEU/RRF,  if  fully  implemented,  could  have  a 
further  positive  impact  on  GDP  growth  in  the 
coming  years,  and  therefore  further  mitigate  the 
debt sustainability risks. 

surrounding 
projections.  

the  government  debt  baseline 

3  -  Long-term  risks  to  fiscal  sustainability 
are high overall. (120)  

The S2 indicator (at 9.3 pps of GDP) points to 
high  fiscal  sustainability  risks.  The  indicator 
shows that, relative to the baseline, the SPB would 
need  to  substantially  improve  to  ensure  debt 
stabilisation  over  the  long  term.  This  result  is 
underpinned  by  the  projected  increase  in  ageing-
related costs (contribution of 6.6 pps. of GDP) and 
the  unfavourable  budgetary  position  (contribution 
of  2.7  pps.  of  GDP).  Ageing  costs’  developments 
are  driven by  the  increase  of  pension  expenditure 
(contribution of 3.1 pps. of GDP) as well as health 
and long-term care spending (joint contribution of 
3.6 pps. of GDP) (Table 2).  

indicator  signals 

Combined  with  debt  vulnerabilities,  as 
highlighted by the S1 indicator, overall long-
term risks are assessed as high. Indeed, the S1 
sustainability  gap 
that  a 
significant consolidation effort of 4.6 pps. of GDP 
would be needed to reduce debt to 60% of GDP by 
2070. This result is mainly driven by the projected 
increase  of  ageing-related  public  expenditure 
(contribution  of  2.6  pps.  of  GDP)  and  the 
unfavourable  budgetary  position  (contribution  of 
2.1 pps. of GDP). (Table 2). 

Finally,  several  additional  risk  factors  need 
to  be  considered  in  the  assessment.  On  one 
hand, several factors aggravate sustainability risks 
such  as  the  recent  increase  in  interest  rates. 
Despite  a  lengthening  of  debt  maturity  in  recent 
years,  the  share  of  short-term  debt  remains 
significant  (more  the  8%  of  total  debt).  Some 
contingent liability risks linked to State guaranteed 
credit  lines,  including  granted  to  firms  and  the 

(120)The S2 fiscal sustainability gap indicator measures the 

permanent fiscal effort (SPB adjustment) in 2024 that would 
be required to stabilise public debt over the long term. It is 
complemented by the S1 fiscal sustainability gap indicator, 
which measures the permanent fiscal effort required in 2024 
to bring the debt-to-GDP ratio to 60% in the long term (by 
2070). For both the S1 and S2 indicators, the risk 
assessment depends on the amount of fiscal consolidation 
needed: ‘high risk’ if the required effort exceeds 6 pps. of 
GDP, ‘medium risk’ if it lies between 2 pps. and 6 pps. of 
GDP, and ‘low risk’ if the effort is negative or below 2 pps. of 
GDP. The overall long-term risk classification brings together 
the risk categories derived from S1 and S2. S1 may notch up 
the risk category derived from S2 when it signals a higher 
risk than S2. See the 2022 Debt Sustainability Monitor for 
further details. 

69 

 
                                                 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table A21.1: Debt sustainability analysis - Malta 

Source: Commission services. 

Table A21.2: Heap map of fiscal sustainability risks - Malta 

Source: Commission services (for further details on the Commission's multidimensional approach, see the 2022 Debt 
Sustainability Monitor). 

70 

Table 1. Baseline debt projections20202021202220232024202520262027202820292030203120322033Gross debt ratio (% of GDP)52.955.153.454.856.156.556.756.756.957.357.758.258.959.7Changes in the ratio12.62.1-1.71.41.30.50.20.00.30.30.40.50.70.9of whichPrimary deficit8.46.74.83.93.12.82.42.22.12.12.12.02.12.1Snowball effect4.4-5.3-5.1-2.9-2.2-2.4-2.2-2.2-1.9-1.8-1.6-1.5-1.4-1.3Stock-flow adjustments-0.10.8-1.40.40.50.00.00.00.00.00.00.00.00.0Gross financing needs (% of GDP)16.015.410.511.711.511.110.910.811.011.111.311.511.812.0S1S2Overall index  (pps. of GDP)4.69.3of which Initial budgetary position2.12.7Debt requirement-0.1Ageing costs2.66.6of which    Pensions1.03.1     Health care1.22.2     Long-term care0.71.4Others-0.3-0.1Table 2. Breakdown of the S1 and S2 sustainability gap indicators3035404550556065707520202021202220232024202520262027202820292030203120322033Graph 1. Deterministic debt projections Historical SPB scenarioLower SPB scenarioFinancial stress scenarioAdverse 'r-g' scenarioBaseline% of GDPp10p20p40p60p80p9030405060708020202021202220232024202520262027% of GDPGraph 2. Stochastic debt projections 2023-2027MedianBaselineBaselineHistorical SPBLower SPBAdverse 'r-g'Financial stressOverallLOWLOWMEDIUMMEDIUMMEDIUMLOWDebt level (2033), % GDP59.745.268.964.060.1Debt peak year20332025203320332033Fiscal consolidation space64%50%82%64%64%Probability of debt ratio exceeding in 2027 its 2022 level64%Difference between 90th and 10th percentiles (pps. GDP)25.0(1)Debtlevelin2033.Green:below60%ofGDP.Yellow:between60%and90%.Red:above90%.(2)Thedebtpeakyearindicateswhetherdebtisprojectedtoincreaseoveralloverthenextdecade.Green:debtpeaksearly.Yellow:peaktowardsthemiddleoftheprojectionperiod.Red:latepeak.(3)Fiscalconsolidtationspacemeasurestheshareofpastfiscalpositionsinthecountrythatweremorestringentthantheoneassumedinthebaseline.Green:highvalue,i.e.theassumedfiscalpositionisplausiblebyhistoricalstandardsandleavesroomforcorrectivemeasuresifneeded.Yellow:intermediate.Red:low.(4)Probabilityofdebtratioexceedingin2027its2022level.Green:lowprobability.Yellow:intermediate.Red:high(alsoreflectingtheinitialdebtlevel).(5)thedifference 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.Short termMedium term - Debt sustainability analysis (DSA)Long termOverall                               (S0)Overall Deterministic scenariosStochastic projectionsS2S1Overall(S1 + S2)LOWMEDIUMHIGHMEDIUMHIGH