A young constitution
Promulgated at independence in 1964, the Maltese constitution was amended in 1974 to establish the Republic of Malta, replacing the King or Queen of England with a President elected for 5 years by the House of Representatives. The President appoints as Prime Minister the leader of the party that won the general election. Legislatively, Malta is a unicameral parliamentary republic. The House of Representatives (Maltese Parliament) is elected every 5 years by universal suffrage on a proportional basis. Since the Second World War, Malta's political system has been based on a de facto two-party system, with the center-left Labour Party and the center-right Nationalist Party. Other political parties have occasionally won seats in parliament, but these are often splinter groups from the two main parties, and their success is short-lived.
Political and institutional crisis
Since March 2013, the Labour Party has held the reins of power, with Joseph Muscat as Prime Minister. But despite a positive economic record, this government found itself entangled in the Panama Papers scandal, which came to light in April 2016, revealing that two people close to the Prime Minister had offshore accounts in Panama. The large-scale protests that followed the murder in October 2017 of Daphne Caruana Galizia, a journalist heavily involved in the Panama Papers investigations , also weakened his position. Bringing together thousands of people, these protests intensified as the investigation revealed the involvement of businessmen and politicians close to power. Marked by the arrest of business tycoon Yorgen Fenech and the resignations of Keith Schembri, head of the Prime Minister's Office, and Konrad Mizzi, Minister of Tourism, 2019 saw increasing pressure, including from a European Union mission, for Joseph Muscat to resign. This he finally did in January 2020, to be replaced on January 12 by Robert Abela, also of the Labour Party, and directly elected by Malta's 17,500 Labour voters, a first.
Economy: the preponderant share of finance and tourism
Controlled public deficit, low unemployment, high growth rate within the euro zone: most indicators testify to the economic dynamism of the Maltese archipelago. And its competitiveness is largely based on a powerful banking sector and a tax advantage that includes a favorable regulatory framework for businesses and liberal legislation on online betting (11% of GDP). In terms of resources, agriculture now accounts for just 1.4% of GDP, while industry (canning, textiles and, above all, shipbuilding) now accounts for just under 15%. Services account for 80% of its wealth. After services linked to trade, which benefit from its privileged location, and those linked to transport and telecommunications, it's finance, with its tax niches, that provides a large part of its income. This windfall has been particularly buoyant since the sale of Maltese passports to wealthy investors, in exchange for the purchase of property on the island. With over 2.7 million tourists arriving in 2019, up 5.9% on 2018, tourism accounted for almost 30% of the island's GDP, with strong growth in cruise tourism. After the setback caused by the Covid-19 crisis, the number of visitors is set to rise to almost 2.3 million in 2022. And in 2023, Malta received over 3 million tourists, beating its 2019 record (+8%). 40% of foreign tourists come from Italy and the UK.
