VALLETTA (Reuters) -Malta announced tax cuts for parents of two or more children on Monday, in a government bid to counter its demographic decline.

Finance Minister Clyde Caruana told parliament that the rock-bottom fertility rate of the Mediterranean island’s native population was the “biggest challenge” facing the country.

“We need to encourage more families to have at least two children,” Caruana said in a speech on Malta’s 2026 budget.

A report by EU statistical agency Eurostat this year showed Malta had the bloc’s lowest fertility rate in 2023, at 1.06.

Maltese Catholic Archbishop Charles Scicluna in September said that Malta faced “ethnic extinction”.

Although densely populated, with around 1,704 people per square kilometre, almost a third of Malta’s population is made up of for

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