The government exceeded its deficit reduction target this year, with the deficit expected to drop to 0.7 per cent from a projected 1.1 per cent.
The deficit will be reduced to 0.5 per cent next year, the Finance Minister announced in the Budget 2017 speech this evening.
"This shows we are not going on some sort of spending spree, and the Budget measures we are taking are affordable in the context of a growing economy," Prime Minister Joseph Muscat told journalists during an informal pre-Budget briefing.
The government debt is expected to drop to 61 per cent next year from 63 per cent this year.