“If I had known, I would have slipped a few tin cans in my luggage! » Oliver Garcia was born near London, but has been living in Valletta, the Maltese capital, for a few years. In mid-December, the young computer scientist returned to the United Kingdom for the holidays. “The hotel, the taxi, the beers: everything is more expensive and it’s a shock. In Malta also everyone complains about inflation. But now that I’m here, I realize that in truth the Maltese are pretty polished. »
The figures published by Eurostat do not prove him wrong: since February, the inflation rate recorded in Malta has been one of the lowest in the euro zone, along with that of France. In November, it was thus 7.2%, compared to 7.1% in France and 11.1% in the European Union (EU) as a whole, far from the records recorded in the three Baltic countries (more 21%). “It must be said that, like Paris, Valletta has deployed a form of very protective tariff shield for households and businesses”summarizes Marcos Carias, economist specializing in the southern euro zone at Coface.
In detail, the government has asked Enemalta, the 67% state-owned energy supplier, to freeze prices at their 2014 level. “In exchange, it compensates for the losses caused by this price cap for the company due to the increase in the cost of energy imports”detail the economists Simone Tagliapietra, Georg Zachmann and Giovanni Sgaravatti in a note on the subject for the Brussels think tank Bruegel.
Fiscal room for maneuver
In fact, the island buys almost all the energy it consumes abroad, mainly oil and gas, while part of the electricity is supplied by Italy, via the cable submarine linking Malta to Sicily. “Because its territory is small and densely populated – 316 square kilometers in all, which makes it the smallest European country, and 520,000 inhabitants – Malta has relatively little developed renewable energies, for lack of space”adds Marcos Carias.
Since 2014, sulphurous “golden passports” have filled the public coffers, largely benefiting wealthy Russians
Still, this price freeze is expensive: 2.5% of gross domestic product (GDP) in 2022, and 3.5% in 2023, according to the International Monetary Fund (IMF). Result: the deficit should stand at 6% of GDP for the whole of 2022, the highest in the euro zone after Lithuania (7.1%). Despite everything, Malta has considerable leeway: at 56.3% of GDP in 2021, its public debt remains well below that of the average in the euro zone, at 97.1% of GDP.
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