Government deficit hits €333.3 million, up by €95m over 2011

Malta's structural deficit has reached an unprecedented €333.3 million in the first seven months of this year, €95.1 million more over the first seven months of 2011.

Official data released today by the National Statistics Office showed that the increase in recurrent revenue of €72.4 million was outweighed by a sharp rise in total expenditure of €167.5 million. This widened the government deficit by €333.3 million.

In a comment released by Labour's shadow finance minister, Karmenu Vella said that government had continued to perform badly throughout the first half of the year with public finances showing further significant deterioration, noting that the €95 million deficit increase over 2011 had not apparently featured in the Central Bank's latest quarterly review's analysis and recommendations to government.

Between January and July of this year, recurrent revenue stood at €1,397.4 million, a rise of 5.5% over last year. The main contributors were income tax, €66.4 million, miscellaneous receipts, €28.7 million, value added tax, €20.7 million, and social security, €16.9 million.

On the other hand, government experienced a substantial decline in proceeds, coming mainly from grants, -€44.9 million, and customs and excise duties, -€15.8 million.

Proceeds from the Central Bank of Malta went down by €6 million.

Compared to 2011, total expenditure was recorded at €1,730.7 million, up by 10%, as a result of higher outlays on all expenditure components.

Data also showed that recurrent expenditure increased by €118.7 million. The major increase was recorded in programmes and initiatives by €80.4 million, mainly as a result of higher social security benefits ( €29.8 million), medicines and surgical materials ( €12.1 million), social security state contributions ( €5.3 million), which also feature as revenue, and EU own resources ( €5.0 million).

Contributions to Church schools and Mater Dei Hospital non-medical equipment both increased by €3.7 million while assistance to help the elderly live independently contributed €3.6 million.

Contributions to government entities increased by €17.3 million, operational and maintenance expenditure increased by €11.3 million and personal emoluments by €9.7 million.

Government's capital expenditure for the past six months amounted to €182 million, marking an increase of €42.4 million when compared to last year.

The NSO attributed the sharp increase by an equity injection of €20 million to the national air carrier and an increase of €11.2 million in EU funds related to the Ministry for Infrastructure, Transport and Communication, which included works on roads infrastructure.

It also said that higher outlays were recorded in the ICT core services agreement ( €6.0 million, EU funds related to the Office of the Prime Minister ( €3.8 million), the Ministry for Resources and Rural Affairs ( €3.6 million) and higher investment incentives ( €2.7 million).

These were partially offset by a reduction of €5.0 million in the contribution towards the Treasury Clearance Fund.

Between the first six months of 2012, the interest component of the public debt servicing costs recorded an increase of €6.4 million.

Government debt

At the end of July 2012, central government debt stood at €4.8 billion, up by €391.7 million over the corresponding period last year. NSO attributed this increase to higher long-term borrowing, which added €505 million.

On the other hand, short-term securities and foreign borrowing declined by €50.8 million and €12.6 million respectively. As a result of consolidation, higher holdings by government funds in Malta Government Stocks resulted in a reduction of €54.2 million.

The euro coins issued in the name of the Maltese Treasury went up by €4.4 million when compared to the coin stock as at the end of July 2011, and totalled €48.2 million.