Malta fuel subsidies reach 75 million euros as budget pressure grows

Malta's policy of maintaining fixed fuel prices since 2020 is placing an increasing burden on the national budget. While citizens and businesses benefit from low costs, the government must cover the gap between regulated prices and volatile global market rates through subsidies.

According to data from the European Commission, diesel in the eurozone averaged approximately 2.3 euros per liter last week, while gasoline was around 2.2 euros. In contrast, Malta has maintained diesel at 1.21 euros and gasoline at 1.34 euros per liter. This has made Malta the country with the cheapest diesel in the European Union.

Finance Minister Clyde Caruana stated that the estimated annual cost for these subsidies has risen sharply. In May, the government projected an annual cost of 30 million euros, but by the end of August, that estimate for the year had climbed to approximately 75 million euros. The government now faces a decision between continuing to fund the difference through the budget or allowing retail prices to rise. Caruana noted that despite rising energy costs, the country must keep its budget deficit below three percent of GDP.