Recommendation for a COUNCIL RECOMMENDATION endorsing the national medium-term fiscal-structural plan of Malta
Date: 2024-11-26
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: Malta, budget deficit, coordination of EMU policies, economic reform, fiscal policy, investment, macroeconomics, national planning, public debt, structural adjustment

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   EUROPEAN COMMISSION  Strasbourg, 26.11.2024  COM(2024) 721 final  Recommendation for a COUNCIL RECOMMENDATION endorsing the national medium-term fiscal-structural plan of Malta  
 
Recommendation for a 

COUNCIL RECOMMENDATION 

endorsing the national medium-term fiscal-structural plan of Malta 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 121 thereof, 

Having regard to Regulation (EU) 2024/1263, and in particular Article 17 thereof, 

Having regard to the recommendation from the Commission, 

Whereas: 

GENERAL CONSIDERATIONS 

(1) 

(2) 

1 

2 

3 

A reformed EU economic governance framework entered into force on 30 April 2024. 
Regulation  (EU)  2024/1263  of  the  European  Parliament  and  of  the  Council  on  the 
effective  coordination  of  economic  policies  and  on  multilateral  budgetary 
surveillance1,  together  with  the  amended  Regulation  (EC)  No  1467/97  on  the 
implementation  of  the  excessive  deficit  procedure2,  and  the  amended  Council 
Directive  2011/85/EU  on  the  budgetary  frameworks  of  Member  States3  are  the  core 
elements of the reformed EU economic governance framework. The framework aims 
at  ensuring  public  debt  sustainability  and  sustainable  and  inclusive  growth  through 
reforms  and  investments.  It  promotes  national  ownership  and  has  a  medium-term 
focus, combined with an effective and coherent enforcement of the rules.  

The  national  medium-term  fiscal-structural  plans  that  Member  States  submit  to  the 
Council  and  to  the  Commission  are  at  the  centre  of  the  new  economic  governance 
framework. The plans are to deliver on two objectives: i) ensuring that, by the end of 
the adjustment period, general government debt is on a plausibly downward trajectory, 
or stays at  prudent  levels,  and that the government  deficit is  brought and maintained 
below the reference value of 3% of GDP over the medium term, and ii) ensuring the 
delivery  of  reforms  and  investments  responding  to  the  main  challenges  identified  in 
the context of the European Semester and addressing the common priorities of the EU. 

Regulation 

(EC)  No 

Regulation  (EU)  2024/1263  of  the  European  Parliament  and  of  the  Council  of  29  April  2024  on  the 
effective  coordination  of  economic  policies  and  on  multilateral  budgetary  surveillance  and  repealing 
Council 
ELI: 
http://data.europa.eu/eli/reg/2024/1263/oj). 
Council  Regulation  (EU)  2024/1264  of  29  April  2024  amending  Regulation  (EC)  No  1467/97  on 
speeding  up  and  clarifying  the  implementation  of  the  excessive  deficit  procedure  (OJ  L,  2024/1264, 
30.4.2024, ELI: http://data.europa.eu/eli/reg/2024/1264/oj). 
Council Directive (EU) 2024/1265 of 29 April 2024 amending Directive 2011/85/EU on requirements 
(OJ  L,  2024/1265,  30.4.2024,  ELI: 
for  budgetary 
http://data.europa.eu/eli/dir/2024/1265/oj). 

the  Member  States 

frameworks  of 

2024/1263, 

30.4.2024, 

1466/97 

(OJ 

L, 

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To that end, each plan is to present a medium-term commitment to a net expenditure4 
path, which effectively establishes a budgetary constraint for the duration of the plan, 
covering four or five years (depending on the regular term of legislature in a Member 
State).  In  addition,  the  plan  should  explain  how  the  Member  State  will  ensure  the 
delivery  of  reforms  and  investments  responding  to  the  main  challenges  identified  in 
the  context  of  the  European  Semester,  in  particular  in  the  country-specific 
recommendations  (including  those  pertaining  to  the  macroeconomic  imbalances 
procedure (MIP), if applicable), and how the Member State will address the common 
priorities of the Union. The period for fiscal adjustment covers a period of four years, 
which  may  be  extended  by  up  to  three  years  if  the  Member  State  commits  to 
delivering a set of relevant reforms and investments that satisfies the criteria set out in 
Regulation (EU) 2024/1263.  

(7) 

(8) 

Following the submission of the plan, the Commission is to assess whether it complies 
with the requirements of Regulation (EU) 2024/1263.  

Upon  a  recommendation  from  the  Commission,  the  Council  is  to  then  adopt  a 
recommendation to set the net  expenditure path  of the Member State concerned and, 
where  applicable,  endorses 
investment  commitments 
the  set  of  reform  and 
underpinning an extension of the fiscal adjustment period. 

CONSIDERATIONS  CONCERNING  THE  NATIONAL  MEDIUM-TERM  FISCAL-
STRUCTURAL PLAN OF MALTA  

(10)  On  20  September  2024,  Malta  submitted  its  national  medium-term  fiscal-structural 

plan to the Council and to the Commission.  

Process prior to the submission of the plan 

(11)  On  21  June  2024  the  Commission  sent,  according  to  Article  9  of  Regulation  (EU) 
2024/1263,  the  reference  trajectory5  to  Malta.  The  Commission  published  the 
reference trajectory on 20 September 20246. The reference trajectory is risk-based and 
ensures that, by the end of the fiscal  adjustment period and in the absence of further 
budgetary  measures  beyond  the  adjustment  period,  general  government  debt  is  on  a 
plausibly  downward  trajectory  or  stays  at  prudent  levels  over  the  medium  term,  and 

4 

5 

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Net expenditure as defined in Article 2 of Regulation (EU) 2024/1263, namely government expenditure 
net  of  (i)  interest  expenditure,  (ii)  discretionary  revenue  measures,  (iii)  expenditure  on  Union 
programmes fully matched by revenue from Union funds,  (iv) national expenditure on co-financing of 
programmes funded by the Union, (v) cyclical elements of unemployment benefit expenditure and (vi) 
one-offs and other temporary measures.  
Prior  guidance  transmitted  to  the  Member  States  and  Economic  and  Financial  Committee  includes 
trajectories  without  and  with  an  extension  of  the  adjustment  period  (covering  4  and  7  years, 
respectively).  It  also  includes  the  main  initial  conditions  and  underlying  assumptions  used  in  the 
Commission’s  medium-term  government  debt  projection  framework.  The  reference  trajectory  was 
calculated on the basis of the methodology described in the Commission’s Debt Sustainability Monitor 
2023  (https://economy-finance.ec.europa.eu/publications/debt-sustainability-monitor-2023_en).  It 
is 
based on the European Commission Spring 2024 Forecast and its medium-term extension up to 2033, 
and  long-term  GDP  growth  and  ageing  costs  are  in  line  with  the  joint  Commission-Council  2024 
Ageing  Report  (https://economy-finance.ec.europa.eu/publications/2024-ageing-report-economic-and-
budgetary-projections-eu-member-states-2022-2070_en). 
https://economy-finance.ec.europa.eu/economic-and-fiscal-governance/national-medium-term-fiscal-
structural-plans_en#malta 

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the  general  government  deficit  is  brought  below  3%  of  GDP  over  the  adjustment 
period and maintained below that reference value over the medium term. The medium 
term  is  defined  as  the  ten-year  period  after  the  end  of  the  adjustment  period.  In 
accordance  with  Articles  6,  point  (d),  7  and  8  of  Regulation  (EU)  2024/1263,  the 
reference  trajectory  is  also  consistent  with  the  deficit  benchmark,  the  debt 
sustainability safeguard and the deficit resilience safeguard. The reference trajectory of 
Malta  sets  out  that,  based  on  the  Commission’s  assumptions  and  assuming  a  4-year 
adjustment period, net expenditure should not grow by more than the values provided 
in  Table  1.  This  corresponds  to  average  net  expenditure  growth  of  5.9%  over  the 
adjustment period (2025-2028).  

Table 1: Reference trajectory provided by the Commission to Malta on 21 June 2024 

2025 

2026 

2027 

2028 

Average 2025-
2028 

Maximum net 
expenditure growth 
(annual, %) 

6.0 

5.8 

5.9 

5.7 

5.9 

Source: Commission’s calculations. 

(12) 

(13) 

In  line  with  Article  12  of  Regulation  (EU)  2024/1263,  Malta  and  the  Commission 
engaged in  a technical  dialogue  from June  to  September 2024. The dialogue centred 
on  the  net  expenditure  path  envisaged  by  Malta  and  its  underlying  assumptions  (in 
particular  the  expected  impact  of  the  benchmark  revision  on  GDP),  as  well  as  the 
envisaged  delivery  of  reforms  and  investments  responding  to  the  main  challenges 
identified  in  the  context  of  the  European  Semester  and  the  common  priorities  of  the 
Union  in  fair  green  and  digital  transition,  social  and  economic  resilience,  energy 
security and the build-up of defence capabilities. 

In September 2024, in line with Article 11(3) and 36(1), point (c) of Regulation (EU) 
2024/1263, according to the information provided by Malta in its plan, Malta engaged 
in a consultation process with social partners.  According to the information provided 
by Malta in its plan, the measures and initiatives in the plan were consulted with the 
Malta  Council  for  Economic  and  Social  Development  (MCESD),  a  platform  that 
convenes the primary social partners in Malta.  

Other related processes 

(14)  On 26 July 2024, the Council established the existence of an excessive deficit in Malta 
due  to  non-compliance  with  the  deficit  criterion7.  The  present  Recommendation 
coincides with the Council Recommendation under Article 126(7) TFEU with a view 

7 

OJ L, 1.8.2024, ELI: https://eur-lex.europa.eu/eli/dec/2024/2128/oj 

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to bringing an end to the situation of an excessive government deficit in Malta8. The 
simultaneous adoption of those recommendations, which is tailored to and justified by 
the  transition  to  the  new  economic  governance  framework,  ensures  consistency 
between the recommended adjustment paths. 

(15)  On 15 October 2024, Malta submitted its Draft Budgetary Plan for the year 2025. The 
Commission  adopted  an  opinion  on  this  Draft  Budgetary  Plan  on  [26  November 
2024]9.  

(16)  On  21  October  2024,  the  Council  addressed  to  Malta  a  series  of  country-specific 

recommendations (CSRs) in the context of the European Semester10.  

SUMMARY OF THE PLAN AND THE COMMISSION’S ASSESSMENT THEREOF 

(17) 

In  line  with  Article  16  of  Regulation  (EU)  2024/1263,  the  Commission  assessed  the 
plan as follows: 

Context: macroeconomic and fiscal situation and outlook 

(18)  Economic activity in Malta grew by 7.5% in 2023, driven by private consumption and 
exports. According to the European Commission Autumn 2024 Forecast, the economy 
is  expected  to  grow  by  5.0%  in  2024,  on  the  back  of  strong  domestic  demand  and 
export performance. In 2025, real GDP is set to increase by 4.3%, as consumption and 
investment continue to support growth. In 2026, real GDP is expected to increase by 
4.3%, as the economy maintains its growth momentum. Over the forecast horizon (i.e., 
2024-2026), potential GDP in Malta is expected to grow at a solid rate (on average), 
driven  by  the  strong  contribution  of  labour  and,  to  a  lesser  extent,  capital 
accumulation. The unemployment rate stood at 3.5% in 2023 and is projected by the 
Commission  to  amount  to  3.2%  in  2024,  3.1%  in  2025  and  3%  in  2026.  Inflation 
(GDP deflator) is projected to decrease from 5.3% in 2023 to 2.6% 2024, and is set to 
reach 2.5% in 2025 and 2.1% in 2026.  

(19)  Regarding fiscal developments, in 2023 Malta’s general government deficit amounted 
to 4.5% of GDP. According to the European Commission Autumn 2024 Forecast, it is 
set to reach 4% of GDP in 2024 and to decline further to 3.5% of GDP in 2025 and, on 
a no-policy change basis, to 3.1% in 2026. The European Commission Autumn 2024 
forecast  includes  Malta’s  draft  budget  for  2025  that  the  government  proposed  to  the 
national parliament in October. General government debt was 47.4% of GDP at end-
2023. According to the European Commission Autumn 2024 Forecast, the debt ratio is 
expected to increase to 49.8% of GDP at end-2024. It is projected to increase further to 
50.4%  of  GDP  at  end-2025  and  50.2%  at  end-2026.  The  fiscal  forecast  by  the 
Commission does not consider the policy commitments in the medium-term plans as 
such  until  they  are  underpinned  by  credibly  announced  and  sufficiently  specified 
concrete policy measures. 

8 

9 
10 

Recommendation for a Council Recommendation with a view to bringing an end to the situation of an 
excessive deficit in Malta, 26.11.2024, COM(2024)955 final. 
Commission Opinion on the Draft Budgetary Plan of Malta, 26.11.2024, C(2024)9061 final. 
Council  Recommendation  on  economic,  budgetary,  employment  and  structural  policies  of  Malta,  not 
yet published. 

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Net expenditure path and main macroeconomic assumptions in the plan 

(20)  Malta’s national medium-term fiscal-structural plan covers the period 2025-2028 and 

presents a fiscal adjustment over four years.  

(21)  The  plan  contains  all  information  required  by  Article  13  of  Regulation  (EU) 

2024/1263.  

(22)  The  plan commits  to the net  expenditure path  indicated in  Table  2, corresponding to 
average  net  expenditure  growth  of  5.9%  over  the  years  2025-2028.  The  average  net 
expenditure  growth  reported  in  the  plan  over  the  adjustment  period  2025-2028  is 
broadly  in  line  with11  the  reference  trajectory  transmitted  by  the  Commission  on 
21 June 2024. The plan assumes potential GDP growth to decrease from 5.1% in 2024 
to 4.8% in 2025 and further to 4.6% in 2026 then to remain stable at that level until 
2028.  In  addition,  the  plan  expects  the  growth  rate  of  the  GDP  deflator  to  decrease 
from 3.1% in 2024 and remain stable at 2.6% in each year until 2028. 

Table 2: Net expenditure path and main assumptions in Malta’s plan  

2024 

2025 

2026 

2027 

2028 

Average over the period of validity of 
the plan 2025-2028  

Net expenditure 
growth  
(annual, %)  

Net expenditure 
growth  
(cumulative, from 
base year 2023, %)  

Potential GDP 
growth (%)  

Inflation (GDP 
deflator growth) 
(%)  

7.4 

6.0 

5.8 

5.8 

6.1 

7.4 

13.8 

20.4 

27.4 

35.2 

5.1 

4.8 

4.6 

4.6 

4.6 

3.1 

2.6 

2.6 

2.6 

2.6 

Source: Medium-term fiscal-structural plan of Malta and Commission calculations. 

5.9 

n.a. 

4.7 

2.6 

Implications of the plan’s net expenditure commitments for general government debt  

(23) 

If the net  expenditure path  committed to  in  the plan and the underlying assumptions 
materialise,  general  government  debt  would,  according  to  the  plan,  slightly  decrease 
from 49.2% in 2024 to 48.8% of GDP at the end of the adjustment period (2028), as 
per the following table. After the end of the adjustment period, over the medium term 
(i.e.  until  2038),  the  debt  ratio  is  set  to  decrease  further  over  the  medium  term 
according to  the plan, reaching  42.3% of GDP in 2038. Thus, according to  the plan, 
general  government  debt  would  remain  below  the  Treaty  reference  value  of  60%  of 
GDP over the medium term. This is plausible based on the plan’s assumptions, as debt 
would be projected to stand below 60% of GDP by 2038 under all deterministic stress 
tests of the Commission’s Debt Sustainability Analysis. Therefore, based on the plan’s 
policy  commitments  and  macroeconomic  assumptions,  the  net  expenditure  path  put 

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The difference is not visible due to rounding. 

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forward in the plan is consistent with the requirement for debt as set out in Articles 6, 
point (a), and 16(2) of Regulation (EU) 2024/1263.  

Table 3 General government debt and balance developments in Malta’s plan  

2023 

2024 

2025 

2026 

2027 

2028 

2038 

Government 
debt 

(% of GDP) 

Government 
balance 

(% of GDP) 

47.3 

49.2 

49.8 

49.9 

49.5 

48.8 

42.3 

5 

-4.0 

-3.8 

-3.4 

-3.0 

-2.6 

-2.1 

Source: Medium-term fiscal-structural plan of Malta 

Implications  of  the  plan’s  net  expenditure  commitments  for  the  general  government 
balance  

(24)  Based  on  the  plan’s  net  expenditure  path  and  assumptions,  the  general  government 
deficit would gradually decrease from 4% of GDP  in  2024 to  3.0% of GDP in  2027 
and 2.6% in 2028. Thus, according to the plan, the general government balance would 
not exceed the 3% of GDP reference value at the end of the adjustment period (2028). 
In  addition,  in  the  ten  years  following  the  adjustment  period  (i.e.  until  2038),  the 
government  deficit  would  not  exceed  3%  of  GDP.  Therefore,  based  on  the  plan’s 
policy  commitments  and  macroeconomic  assumptions,  the  net  expenditure  path  put 
forward  in  the  plan  is  consistent  with  the  requirement  for  the  deficit  as  set  out  in 
Articles 6, point (b), and 16(2) of Regulation (EU) 2024/1263.  

Time profile of the fiscal adjustment 

(25)  The  time  profile  of  the  fiscal  adjustment,  measured  as  the  change  in  the  structural 
primary balance, as described in the plan,  is broadly linear, as required by Article 6, 
point  (c)  of  Regulation  (EU)  2024/1263.  Therefore,  based  on  the  plan’s  policy 
commitments and macroeconomic assumptions, the net expenditure path  put forward 
in the plan is consistent with the no-backloading safeguard clause set out in Article 6, 
point (c), of Regulation (EU) 2024/1263.  

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Table 4 Structural primary balance developments in Malta’s plan  

2023 

2024 

2025 

2026 

2027 

2028 

Structural primary 
balance 

(% of GDP) 

Change in structural 
primary balance 

(pps.) 

-3.5 

-2.7 

-2.2 

-1.7 

-1.2 

-0.8 

n.a. 

0.8 

0.5 

0.5 

0.5 

0.4 

Source: Medium-term fiscal-structural plan of Malta  

Consistency with the excessive deficit procedure 

(26)  The net expenditure path set out in the plan is in line with the requirements under the 
excessive  deficit  procedure  (in  particular  with  the  minimum  annual  structural 
adjustment established in Article 3(4), third subparagraph of Council Regulation (EC) 
1467/97). 

Consistency of the plan with the deficit resilience safeguard 

(27)  The  requirement  of  the  preventive  arm  set  out  in  Article  8  of  Regulation  (EU) 
2024/1263 regarding the deficit resilience safeguard, which aims to provide a common 
margin  relative  to  the  deficit  reference  value  of  3%  of  GDP,  applies  to  Malta  as  of 
2028, as the deficit is planned to be brought below 3% of GDP as of 2027. In 2028 the 
annual adjustment in the structural primary balance should  therefore not  be less than 
0.4% of GDP if the structural deficit remained above 1.5% of GDP in 2027, to achieve 
a common resilience margin in structural terms of 1.5% of GDP. The fiscal adjustment 
that  results  from  the  plan’s  policy  commitments  and  macroeconomic  assumptions  is 
0.4% in 2028. Therefore, based on the plan’s policy commitments and macroeconomic 
assumptions,  the  net  expenditure  path  put  forward  in  the  plan  is  consistent  with  the 
deficit resilience safeguard. 

Consistency of the plan with the debt sustainability safeguard 

(28)  According to the plan, general government debt is set to remain below 60% of GDP 
throughout the adjustment period. Therefore, the debt sustainability safeguard does not 
apply according to the plan. 

Macroeconomic assumptions of the plan 

(29)  The plan is based on a set of macroeconomic and fiscal assumptions that is in line with 
the Commission’s assumptions transmitted to Member States on 21 June 2024. It takes 
into account additional available information compared to the reference trajectory and 
includes  accordingly  updated  macro  and  fiscal  indicators.  The  impact  of  this  update 
does not significantly affect the average net expenditure growth in the plan compared 
to the reference trajectory. 

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Fiscal strategy of the plan 

(30)  According  to  the  indicative  fiscal  strategy  in  the  plan,  the  commitments  on  net 
expenditure will be delivered mainly through expenditure restraint. The indicative set 
of  policy  measures  includes  a  gradual  reduction  of  reliance  on  energy  subsidies 
facilitated  by  structural  reforms  and  strategic  investments  in  the  energy  sector  to 
promote  renewable  energy  sources  and  enhance  energy  efficiency.  The  precise 
specification  of  the  relevant  policy  measures  is  to  be  confirmed  or  adjusted  and 
quantified  in  the  annual  budgets.  At  the  same  time,  there  are  risks  to  the 
implementation of the indicative fiscal strategy in the plan, which stem from still high 
uncertainty on the exact specification of the measures. In addition, the Draft Budgetary 
Plan  for  2025  specifies  the  policy  measures  through  which  the  net  expenditure 
commitment for 2025 will be achieved12. 

Reform  and  investment  intentions  in  the  plan  responding  to  the  main  challenges 
identified in the context of the European Semester and addressing the common priorities 
of the Union 

(31)  The plan describes policy intentions concerning reforms and investments to respond to 
the main challenges identified in the context of the European Semester, especially the 
CSRs, and to address the common priorities of the EU. The plan includes 143 reforms 
and  investments  addressing  the  common  priorities  of  the  EU,  of  which  32  are 
financially supported by the RRF and 23 by the cohesion policy funds. 

(32)  Concerning  the  common  priority  of  a  fair  green  and  digital  transition,  including  the 
climate objectives set out in Regulation (EU) 2021/1119 and the objectives outlined in 
Malta’s National  Energy and Climate Plan (NECP) for 2021-2030, the plan includes 
measures on streamlining permitting processes for renewable energy plants  (included 
in  the  recovery  and  resilience  plan  (RRP))  and  the  continuation  of  programmes 
encouraging  the  adoption  of  renewable  energy  technologies  by  households  and 
business.  These  measures,  among  others,  aim  to  address:  the  CSRs  on  reducing 
reliance  on  fossil  fuels  and  promoting  renewable  sources  of  energy  issued  by  the 
Council  from  2020  to  2024.  The  plan  also  includes  measures  to  promote  the 
retrofitting of non-residential private and public buildings (included in the RRP) and to 
adopt  energy  audits  by  SMEs,  which,  together  with  other  measures,  are  expected  to 
contribute to the 2019- 2023 CSRs on energy efficiency. The plan also contains large 
investments  in  waste-to-energy  and  organic  processing  plants  as  well  as  reforms 
included  in  the  RRP  related  to  construction  and  demolition  waste,  which,  among 
others, are  expected to  contribute to  the 2020  CSR  on waste management.  Measures 
included in the plan on the optimisation of potable water facilities aim, among others, 
to  contribute  to  the  2019  CSR  on  resource  management  and  efficiency.  Measures  in 
the  plan  to  enhance  sustainable  transport  means  and  infrastructure  across  multiple 
modes of transport, and other measures including those in the RRP, aim to address the 
CSRs on reducing congestion and emissions from road transport issued by the Council 
from  2019  to  2024.  The  plan  also  includes  measures  enhancing  the  resilience, 
capacity,  and  security  of  the  Government’s  digital  infrastructure  (included  in  the 
RRP), improving access to digital technologies (partly through measures in the RRP), 
and  other  measures  such  as  enhancing  the  Malta  Business  Registry  online  portal, 

12 

See Commission Opinion on the Draft Budgetary Plan of Malta, 26.11.2024, C(2024)9061 final. 

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which are, among others, expected to contribute to the 2020 CSR on accelerating the 
digital transition. 

(33)  Concerning  the  common  priority  of  social  and  economic  resilience,  including  the 
European  Pillar  of  Social  Rights,  the  plan  includes  measures  to  introduce  incentive 
mechanisms to extend the working life beyond retirement age and diversifying retiring 
income. These measures, among others in the plan, aim to address the 2019 CSR on 
sustainability of the pension system. The plan also includes measures to secure critical 
medical supplies, strengthen primary care, and ensuring a sustainable workforce, also 
through the RRP reform to improve foreign workers’ wellbeing which, among others, 
aim  to  address  the  2019  and  2020  CSRs  on  strengthening  the  sustainability  and 
resilience  of  the  healthcare  system.  Measures  in  the  plan  on  strengthening  lifelong 
learning,  upskill  and  reskill  activities  and  improving  the  quality  and  access  to 
education, and other measures including those in the RRP, aim to address the CSR on 
inclusive education and training issued by the Council in 2019, the CSR on enhancing 
skills and competences in response to the green transition of 2023, as well as the CSR 
on  the  quality  and  market  relevance  of  education  and  training  to  address  low 
educational  outcomes  of  2024.  Furthermore,  the  plan  includes  measures  to  support 
venture capital and to revamp the national research and innovation framework, which 
among others, aim to address the 2020 CSR on promoting private investment and the 
2019  and  2020  CSRs  on  research  and  innovation.  Measures  to  reinforce  the 
prosecution service (included in the RRP), and continue efforts to detect and prosecute 
corruption  (included  in  the  RRP)  will,  among  others,  aim  to  address  the  CSRs  on 
strengthening  the  independence  and  efficiency  of  the  justice  system  issued  by  the 
Council  in  2019  and  2020  and  the  CSR  on  enhancing  the  governance  framework 
issued by the Council in 2019. Moreover, the plan includes  measures on anti-money 
laundering and taxation, such as the efforts to continue with the implementation of the 
Financial Intelligence Analysis Unit (FIAU) Strategy 2023-2026, and to introduce new 
legislation on inbound and outbound payments (included in the RRP), that will aim to 
address  the  CSR  on  progressing  with  strengthening  the  anti-money  laundering 
framework  issued  by  the  Council  in  2019  and  2020  and  the  CSRs  on  curbing 
aggressive tax planning practices issued by the Council from 2019 until 2024.  

(34)  Concerning  the  common  priority  of  energy  security,  the  plan  includes  measures 
streamlining  permitting  processes  for  renewable  energy  plants  and  supporting 
investment  in  renewables  as  well  as  strengthening  the  electricity  grid  and  storage 
capacity (also included in the RRP). 

(35)  Concerning the common priority of defence capabilities, the plan includes investments 
in  modernising  military  infrastructure,  enhancing  cybersecurity  and  aligning  with 
European Defence Industrial Strategy.  

(36)  The  plan  provides 

information  on 

the  consistency  and,  where  appropriate, 
complementarity  with  the  cohesion  policy  funds  and  Malta´s  RRP  in  various  areas 
including  the  digitalisation  and  modernisation  of  public  administration,  promoting 
sustainable  multimodal  urban  mobility,  fostering  resilience  in  the  health  sector  by 
ensuring a strong and sustainable workforce and bolstering the resilience of the labour 
market, advancing gender equality and strengthening skills.  

(37)  The Plan provides an overview of the public investment needs of Malta regarding the 
common  priorities  of  the  EU  and  aims  to  contribute  to  meet  them.  For  a  fair  green 
transition,  Malta  identifies  investment  needs  related  to  renewable  energy  sources, 
energy  efficiency  climate  adaptation,  circular  economy,  pollution  prevention  and 

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biodiversity  protection.  For  a  fair  digital  transition,  the  plan  identifies  investment 
needs  related  to  digital  skills,  digital  transformation  of  businesses  and  secure  and 
sustainable digital infrastructure. Related to social and economic resilience, including 
the European Pillar of Social Rights, investments needs are identified in active labour 
policies and social services early childhood education, lifelong learning and vocational 
education and training (VET), health infrastructure and sustainable tourism. Related to 
energy  security,  investments  needs  are  identified  in  renewable  energy  infrastructure, 
particularly  solar  and  wind  energy,  energy  efficiency  and  the  development  of  smart 
grids and energy storage solutions. Related to build-up of defence capabilities, Malta 
identifies investment needs in its defence capabilities to ensure national and European 
security. 

Conclusion of the Commission’s assessment 

(38)  Overall,  the  Commission  is  of  the  view  that  Malta’s  plan  fulfils  the  requirements  of 

Regulation (EU) 2024/1263.  

OVERALL CONCLUSION 

(39) 

In accordance with Article 17 of Regulation (EU) 2024/1263, the net expenditure path 
as set in the plan should be recommended by the Council to Malta. 

HEREBY RECOMMENDS that Malta  

1. 

Ensure that net expenditure growth does not exceed the maxima established in Annex 
I to this Recommendation. 

In  addition,  the  Council  invites  Malta  to  ensure  the  delivery  of  reforms  and  investments 
responding  to  the  main  challenges  identified  in  the  context  of  the  European  Semester,  in 
particular in the country-specific recommendations, and addressing the common priorities of 
the Union.  

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ANNEX I 
Maximum growth rates of net expenditure 

(annual and cumulative growth rates, in nominal terms) 
Malta 

Years 

2025 

2026 

2027 

2028 

Growth rates 
(%) 

Annual 

6.0 

Cumulative 

13.8 

5.8 

20.4 

5.8 

6.1 

27.4 

 35.1 

(*) The cumulative growth rates are calculated by reference to the base year of 2023. 

Done at Strasbourg, 

For the Council 
The President 

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