Assessing debt management and the cost of servicing debt in Malta

Abstract

This dissertation analyses how debt is managed and how it is financed in Malta. The US, UK and Republic of Slovenia are also analysed to act as a comparison on different grounds. A set of guidelines prescribed by the IMF and World bank are used to analyse the efficiency in debt management. Malta, although having a good management of its debt, incurs a high cost to finance this debt. The analysis indicated that Malta has both a short average maturity and a high level of interest rate compared to the other three countries. These two factors combined result in higher cost to finance debt. This cost has been sustained for the time being but this calls for policy reviews. The accession of Malta in the EU and our participation in a common currency will hopefully aid Malta in financing its debt at a lower cost.