Lawmakers from Malta's ruling Labour Party met on Sunday to decide the future of Prime Minister ma amid a crisis sparked by the investigation into a murdered journalist.
Pressure grew both within and outside the party for him to quit after the probe into the 2017 car bomb killing of anti-corruption journalist Daphne Caruana Galizia led to charges on Saturday against a prominent businessman with alleged ties to ministers and senior officials.
Yorgen Fenech, 38, was taken to a Valletta court late on Saturday and charged with complicity in the murder. He pleaded not guilty to that and other charges.
The government had earlier turned down Fenech's request for immunity from prosecution in return for revealing information about the murder plot and about alleged corruption involving Muscat's former chief of staff Keith Schembri and former Tourism Minister Konrad Mizzi, among others, court filings showed.
Schembri and Mizzi resigned on Tuesday and Schembri was interrogated for two days by police before being released without charge. Schembri has denied any wrongdoing. Mizzi on Tuesday denied any business links with Fenech and any wrongdoing.
Labour members of parliament gathered at Girgenti, the prime minister's official countryside retreat, to decide Muscat's future. The prime minister was thought to be preparing to announce his departure but seeking to stay in office until a successor was chosen, according to local media and government officials close to Muscat.
Influential opinion-makers in Malta have turned against Muscat for sticking by Schembri, an old friend since school, and including Schembri in security briefings on the murder investigation even after Fenech was identified both as a suspect in the murder and an associate of Schembri.
Saviour Balzan, editor of the pro-Labour Malta Today newspapers, said on Saturday Muscat had showed a "serious error of judgment".
Caruana Galizia's family called on Saturday for Muscat to step aside.
Caruana Galizia had reported that Schembri and Mizzi had set up secret companies in Panama. She also reported how another company, called 17 Black, was meant to be a vehicle to deposit funds into those companies. Following her murder, an investigation by Reuters and Times of Malta showed Fenech as having been the owner of 17 Black.
Mizzi has denied any business ties to Fenech or knowledge of 17 Black or any criminal activity.
Schembri has always denied any wrongdoing. Speaking on Saturday for the first time since his arrest, he denied being the author of a type-written letter that Fenech told police he secretly received after his arrest. Fenech said the letter told him to pin the blame for the murder on another government minister.
"I immediately denied that the letter came from me when the police were interrogating me and I stand by that completely," Schembri told the Times of Malta.