Public debt target revised upwards three times by €280 million – PL

Shadow finance minister Karmenu Vella has claimed that the finance ministry's target for public debt had been revised three times in the last eight months, when national debt was originally forecast to go down to 72% of GDP by end-2012.

The last official figure of national debt was at 75% of gross domestic product.

"Initially, the finance minister had indicated public debt at end-2012 would be at 66.9% of GDP when the stability programme was presented to the European Commission in April 2011.

"The first revision was announced in the Budget in November 2011, 68.9% of GDP. Five months later the target was revised upward to 70.3% in the April 2012 stability programme."

Vella said that cumulatively, the public debt target had been revised upwards by more than 5% of GDP in less than a year. "Between its target in the Stability Programme presented in April 2011 and today, the government has revised its public debt figure upwards by around 5% of GDP or €280 million."

Vella said that the results of the first quarter of 2012 had already shown debt standing at 75% of GDP, excluding government-guaranteed debt of 16.7% for public corporations, which puts the total of debt to almost 92% of GDP.

"For debt to stand at 72% of GDP, our gross domestic product would have to grow at a much higher rate than our debt. This is a very optimistic assumption, considering that public debt in the first five months increased by 4%, whilst our GDP only grew by 1% in the first three months," Vella said.

Vella also contradicted claims by finance minister Tonio Fenech that Malta's contribution to the European Financial Stability Facility had increased national debt, saying that EFSF guarantees were explicitly included and taken into consideration with the debt projections in both the Budget and in the Stability Programme.

"NSO data shows that these EFSF guarantees amounted to 0.9% of GDP in Q1 of 2012. Therefore, it is absolutely false that excluding these guarantees would bring the public debt from 72% to 69% of GDP," Vell said.

"One could also argue that taking away the 0.9% EFSF guarantees from the actual present figure of 75% debt, and including the 16.7% of government guaranteed debt, total overall government's debt commitments would still be well over 90% of GDP."