Increase in government expenditure pushed up by social security, health

During the first five months this year, the shortfall between recurrent revenue and total expenditure of central government amounted to €234.4 million, an increase of €83.6 million compared to the corresponding period in 2011.

The increase in recurrent revenue of €27.2 million was outweighed by a rise in total expenditure of €110.8 million, widening the government deficit.

During January-May 2012, recurrent revenue stood at €1,008 million, a rise of 2.8 per cent over last year. The main contributors were income tax ( €42.1 million), social security ( €13.6 million) and VAT ( €9.6 million).

These were partly offset by a decline in proceeds from grants (-€18 million), miscellaneous receipts (-€10.5 million), customs and excise duties (-€7.6 million) and the Central Bank (-€6 million).

Compared to the corresponding period in 2011, total expenditure was recorded at €1,242.4 million, up by 9.8 per cent, as a result of higher outlays on all expenditure components.

Recurrent expenditure increased by €92.1 million, mainly due to higher outlays on programmes and initiatives by €68.2 million. This was the result of added social security benefits ( €22.7 million), medicines and surgical materials ( €8.1 million), EU own resources ( €8 million), assistance to help the elderly live independently ( €3.5 million), social security state contributions ( €2.8 million), which also feature as revenue, and electoral activities ( €2.1 million).

An increase in expenditure was also recorded in operational and maintenance expenditure ( €11.1 million), personal emoluments ( €7.6 million) and contributions to government entities ( €5.1 million).

In addition, government's capital expenditure for the period under review reached €124.3 million. The comparative increase of €14.8 million was mainly the result of an equity injection of €20 million to the national air carrier and an increase in EU funds related to the ministry for infrastructure, transport and communication ( €6.9 million). These were partly outweighed by a contribution towards the treasury clearance fund of €11 million in 2011, which was not repeated during the period under review.

Moreover, during January-May 2012, the interest component of the public debt servicing costs recorded an increase of €3.9 million.

At the end of May, central government debt stood at €4,625.5 million, up by €179.4 million, or 4 per cent, over the corresponding period last year. This increase was the result of higher long-term borrowing, which added €328.6 million.

On the other hand, short-term securities and foreign borrowing declined by €92.1 million and €13.6 million respectively.

Moreover, as a result of consolidation, higher holdings by government funds in MGSs resulted in a reduction of €48 million in government debt. Euro coins issued in the name of the Maltese treasury went up by €4.5 million when compared to the coin stock as at the end of May 2011, and totalled €46.3 million.