Interview with Jerome Caruana Cilia
“Malta is at the limits of a growth model that prioritises scale over productivity. Rising public debt, persistent inflation and mounting structural constraints point to a deeper imbalance in the country’s economic strategy and ultimately impact citizens’ quality of life,” says Jerome Caruana Cilia, the opposition’s shadow minister for the economy.
Caruana Cilia argues that the central question facing Malta is no longer how quickly the economy is expanding, but what is driving that expansion and, at what cost.
“This is about whether Malta’s growth can continue adding more pressure to the system, or whether growth can come from becoming more productive. Right now, we are still too close to the first model.”
His diagnosis is of an economy that has become dependent on population growth and consumption-led expansion, rather than productivity gains, innovation or higher value-added output. He describes it as a “low-productivity, high-intensity” model that is now encountering structural constraints.
“When you rely too heavily on scale, you eventually run into constraints. An overload on the infrastructure, labour capacity, and most importantly on our quality of life, constraints that can no longer go unnoticed by the Maltese.”
Caruana Cilia’s comments come as Malta’s public debt now soars above €11bn, a level he says should be viewed not only through a fiscal lens, but as a symptom of how growth has been managed in recent years.
“When debt crosses €11 billion, it stops being a technical discussion and becomes a question of whether public spending is actually transforming the economy or simply maintaining momentum.”
While acknowledging the impact of global shocks including inflationary pressures and supply chain disruptions, he argues that domestic policy choices have reinforced structural inefficiencies rather than addressed them.
“Malta should be having a serious debate about low productivity and the limits of demand-led growth. We are not immune to that conversation. In fact, we are experiencing it in a more compressed way than other economies.”
Caruana Cilia’s criticism is mostly towards Malta’s reliance on expanding the labour force, in part through population growth, as a primary driver of GDP, an approach which he believes is no longer sustainable.
“That model has reached its limits. We cannot indefinitely solve structural constraints by increasing scale.”
Instead, he calls for a shift towards productivity-led growth, defined by higher efficiencies in output per worker rather than a larger workforce.
“The central question is no longer how big the economy is getting, but how much value each unit of labour is producing. That is the only sustainable path forward.”
Caruana Cilia links this structural issue directly to living standards, arguing that headline growth figures have masked a deterioration in quality of life.
“A segment of our population might be earning a bit more but overall, quality of life has gone down the drain,” he says.
He points to congestion, infrastructure strain and administrative inefficiencies as hidden costs that compound inflationary pressures. These, he argues, are often overlooked in macroeconomic debates focused on headline price indices.
“When debt crosses €11 billion, it stops being a technical discussion”
“People feel inflation, but they also feel friction in delays, bureaucracy, inefficiency,” he says. “Those hidden costs matter just as much as global price movements.”
Caruana Cilia argues that inflation in Malta is frequently attributed to external factors, but insists domestic inefficiencies amplify the problem.
“This does not mean we should not redistribute the proceeds of growth towards a better quality of life. Support for targeted social measures needs to happen alongside national structural reform.”
He highlights a series of proposals from the Nationalist Party aimed at easing cost pressures and improving work-life balance, including exempting the first €10,000 earned from part-time work from tax, introducing an additional year of government-paid parental leave, and maintaining energy subsidies to shield households and businesses.
However, he insists such measures must be accompanied by deeper reforms to how the economy functions. “Governance,” he argues, “is itself an economic variable rather than a purely administrative concern.”
“If decision-making is slow or inconsistent, the economy becomes less competitive by default. Governance quality is now an economic factor, not just a political one just as much as inefficiencies in planning, regulation and execution deter investment and constrain high-value sectors from scaling.”
“If the environment is uncertain or slow, capital simply goes elsewhere,” he says.
He identifies fintech, artificial intelligence-enabled services, life sciences, maritime innovation and advanced digital industries as key areas of opportunity for Malta’s economic future. But he cautions that sectoral ambition alone is insufficient without systemic reform.
“Competitiveness is not just about choosing the right sectors but also about whether the system allows them to scale quickly, predictably and efficiently. Regulatory friction and administrative delays remain persistent barriers to investment and productivity growth.”
“You can have all the strategy documents you want but if implementation is slow and if education and skills policy are not made central to any transition towards a higher-productivity economy, strategy will take us nowhere.”
“At this stage, Malta’s economic trajectory is based on a choice between two models: continued expansion driven by scale, or a reorientation towards productivity and value creation. And we all know which path is the more sustainable one if we are to ensure true quality of life.”
He concludes that Malta’s challenge is not a lack of economic potential, but a lack of structural ambition in how that potential is developed.
“The capacity is there. What is needed is the willingness to shift the model from managing growth to upgrading it.”
