Malta Budget 2023 Highlights
On 24 October, Finance Minister Clyde Caruana announced Malta's budget for the year 2023. It certainly did not go unnoticed that there was a new briefcase to hold the budget for future years. The Minister decided to break with tradition and replace the classic black suitcase with a new one in the color bright red. The briefcase utilised by Minister Caruana is a nod to Malta’s British past and displays the Republic of Malta’s coat of arms.
Speaking of changes, let us now see what the new 2023 budget will bring. Taking into account the post-pandemic situation and the ongoing conflict in Ukraine, the 2023 budget was created to best address these global challenges.
“This is fundamental in a global scenario where many countries are experiencing rates of inflation which have been unheard of for more than 40 years,” the MEA said.
The aim of the new budget is to cushion the country from inflation and rising energy prices. Speaking at a press conference Prime Minister Robert Abela said this was a strong budget that put the people's difficulties at the center. It showed how the government was helping families in this time of need.
In terms of economic performance, the Government forecasts that the economy will grow by 6% in real terms in 2022. Exports will also contribute positively owing to the tourism sector’s strong recovery witnessed in the past few months. Employment growth is also expected to remain buoyant with a 4% increase and unemployment rates remaining among the lowest in the EU at 3.1%. Inflation is expected to hit 5.7% this year, with heightened inflationary pressures expected in 2023.
After taking a look at the big picture below you can find the main highlights in the real estate field and the environmental sustainability area, a subject close to our company's core business.
With regard to real estate, the 2023 budget introduced that First-time buyers will receive a grant of €10,000 split across 10 years. This grant will be for anyone who has purchased a home for less than €500,000, and for those who purchased their first home after 1 January 2022.
The Deposit Payment Scheme has been extended to cover properties of a maximum price of €225,000, while the New Hope Guarantee currently operated by APS Bank will see two other banks enter into the scheme. Previous schemes related to property purchases will be extended - such as including the stamp tax reduction schemes for first-time and second-time buyers and purchase of property in Gozo. Also, First time buyer Gozitan couples who purchase a property in Gozo will receive a €30,000 grant.
In terms of environmental impact, the 2023 budget promises the continuation of various infrastructural projects around Malta and Gozo, including a €60m investment in Gozo under the Sustainable Urban Development initiative. Regarding green spaces, the Government will spend €700 million over seven years. The environment ministry is drawing up plans to roll out a new agency next year. The government aims to roll out schemes incentivizing the installation of solar panels, batteries for the storage of renewable energy, water heaters, and restoration of wells in old dwellings. Grant scheme under the Recovery and Resilience Plan to be extended to climate-friendly renovations made to commercial buildings. There are also plans to install another 1,200 electric vehicle charging points across the country by 2024. Currently, there are 340 in total. The incentives for buying an electric car increase to €11,000, rising to €12,000 if you also have an old car to scrap.
Although many were looking for many innovative proposals in this new 2023 budget that could shake up the economic situation, we can say that the government has favoured a budget that speaks of certainty and stability taking into account the tough times the world is facing. Some criticism has been made about the fact that in the budget the problems regarding the traffic situation and the amount of cars on Maltese roads remain unresolved, but as Prime Minister Robert Abela stated: "We have clear priorities that revolve around people's quality of life.”
The challenge for the next one will be to create new economic drivers. In this field, the following actions have been foreseen in the budget of 2023.Higher cash grants for companies investing in digitalisation. Aid under the current Malta Enterprise scheme will increase to 50% of eligible investment costs capped at a maximum of €100,000. Many initiatives are also in the start-up field : the launch of ‘Start in Malta’ brand, a one-stop shop offering assistance to start-ups, extension of Microinvest Scheme to Social Enterprises. Cash grants for SMEs under Business Enhance Schemes and the establishment of a Venture Capital Fund.