Role and function

The Debt Management Directorate (DMD) operates within the Treasury Department. Established in December 2006, the Directorate is responsible for the operational dimensions of debt and cash management for the central government and for providing funding for specific requirements as authorised by Parliament.

The principal objective of the Directorate in its debt management activity is to raise the required funds in such a way as to ensure that:

1. The annual central government borrowing programme (short- and long-term) is financed at the lowest possible cost over the medium- to long-run and prudently, consistent with an acceptable level of risk;  
2. The development of the domestic financial markets is given the necessary support; and 
3. The levels of liquid funds are adequate to meet central government’s financial obligations as and when they fall due.

The organizational structure of the DMD reflects international standards. In line with these best practices, the DMD is divided into a Front, Middle and a Back Office to ensure a clear division of responsibilities.

The Front office executes government debt policy regarding the issuance of government debt securities; the Middle office undertakes research and analytical work; while the Back office deals with the recording, settlement and reporting of central government debt.

Legal framework for borrowing

The Minister for Finance, on behalf of the Government of Malta, can borrow funds both locally and abroad as provided and authorised by an Act of Parliament. The amount of central government annual borrowing is capped in the annual Budget Measures Implementation Act. 

All central government borrowing is carried out through the Treasury department by the Debt Management Directorate (DMD). Nevertheless, bilateral foreign loans are negotiated by the Ministry for Finance, whereas the recording and servicing of such foreign loans is undertaken by the DMD.

All domestic borrowing by the central government is invariably issued by way of public offers, mostly by competitive auctions. The two main debt securities issued by the Treasury Department are (i) Malta Government Stocks, a negotiable security with a medium- to long-term maturity horizon, and (ii) Treasury bills, a short-term negotiable debt security with a maximum tenor of one year. On the other hand, all foreign borrowing has to-date taken the form of bilateral loans negotiated with foreign governments, international organizations or supranational institutions and are usually designed to finance specific capital projects.

Under article 106 of the Constitution of Malta, the public debt of Malta, including the interest payments thereon, Sinking Fund payments and redemptions in respect of that debt, is a charge on the Consolidated Fund and other public funds of the government of Malta.

The statutory basis for central government borrowing is set out under the following primary and subsidiary legislation:

Government Borrowing and Management of Public Debt Act, Cap. 575

Malta Government Retail Savings Bonds Regulations

Malta Treasury Bills Regulations

Malta Government Stocks Regulations 

Local Loans Ordinance, Chapter 161 (relating to terms and conditions applicable to loans authorised to be raised locally by the issue of stock in Malta); [The Act that governed the issuance of Malta Government Stock up to 31st August 2017].

Local Loans (Registered Stock) Regulations, S.L. 161.01

Development Loan Act, Cap. 229 (in respect of bilateral loans raised outside Malta); [The Act that governed bilateral loans up to 31st August 2017]

Budget Measures Implementation Act – An annual budget law that authorises the Minister for Finance to borrow funds on behalf of the government of Malta, during the financial year, for an established maximum amount, by the issuance of debt securities, and provides also the main purposes for which government can conduct such borrowing.

Legal Entity Identifier (LEI): 549300CZVZYSMSGX6X78