Deficit experienced this year in Malta will carry on into 2021, Maltese Finance Minister Edward Scicluna said on Wednesday.
The surplus in public finances registered by Malta last year was eaten up by the effect of the COVID-19 pandemic, he said at a press conference during the launch of a document outlining the country’s economic and financial standing and the government’s vision for 2021.
Despite this, the government does not plan on introducing any new taxes to make up for the shortfall, he noted.
Scicluna said that the pandemic and the closures resulting from it have had an unprecedented impact on the Maltese economy. He admitted uncertainties still exist for the economic development in the future as the global efforts against the COVID-19 pandemic continue.
Malta’s gross domestic product (GDP) is expected to shrink by 6.6 percent in 2020, according to estimates published by the Central Bank of Malta in August. But the central bank predicted the Maltese economy is likely to grow by 6.1 percent in 2021 and 4.2 percent in 2022.
“We are now studying the next phase to make sure we keep supplying oxygen to our economy,” he added.
According to Scicluna, Malta was one of the first countries that managed to give banks the liquidity they needed through tax deferrals and then this was passed on to clients through moratoriums on bank loans to cushion the effect the pandemic had on people’s incomes.
On economic growth, the finance minister said in the second quarter, when the pandemic really hit hard, the closure of the tourism industry, which is one of the main pillars of Malta’s economy, had a very bad impact.
“The more measures we implement, the greater the deficit and the more work will have to be done afterwards to get the finances back on track,” he said.