Deficit falls by €6.2m to €288 million

The 2.1 per cent decline in the government deficit was the result of a rise in recurrent revenue by €37.9 million, which was partly offset by additional expenditure of €31.7 million. During the period under review, recurrent revenue stood at €849.2 million. The comparative increase of 4.7 per cent was triggered by higher returns from Income Tax (+€23.5 million), Value Added Tax (+€20.6 million) and customs and excise (+€10.4 million). On the other hand, declines in recurrent revenue were registered in Grants (-€7.2 million), Social Security (-€6.6 million) and Licenses, Taxes and Fines (-€5.3 million).

Total expenditure for the first five months amounted to €1,137.4 million, up by 2.9 per cent, as a result of a rise in recurrent expenditure and higher outlays on capital, when compared to the

corresponding period last year.

The major contributors to the increase in recurrent expenditure were more spending on Social Security Benefits of €26.3 million, the reclassification of the Malta Tourism Authority (which shifted €13.0 million from capital to recurrent expenditure), and a higher contribution to the University of Malta of €4.5 million. Concurrently, personal emoluments added €19.5 million, whereas operational and maintenance expenditure went down by €6.1 million. Declines were recorded in the shipyards’ voluntary retirement schemes and medicines and surgical materials, by €17.4 million and €15.0 million respectively.

Capital expenditure went up by €9.3 million. This was mainly brought about by increases in the EU Cohesion Fund 2007-2013 of €9.2 million (relating to the Malta South Sewage Treatment Infrastructure), the External Borders Fund of €6.0 million, road construction improvements of €3.5 million and the EU Agriculture Guarantee Fund of €3.4 million. These were partly offset by the reclassification of the Malta Tourism Authority.

The interest component of the public debt servicing costs edged up from €89.8 million in January-May 2009 to €90.0 million this year.

In May 2010 the Government issued a €14.8 million loan facility to Greece as part of the Eurozone’s rescue package. At the end of May 2010, Central Government debt stood at €4,176.3 million, an increase of 10.6 per cent or €401.6 million over the corresponding month last year. The contributor to this change was long-term borrowing, which went up by €441.6 million and accounted for 81.7 per cent of total government debt. On the other hand, declines were registered in short-term securities and foreign borrowing, by €29.1 million and €13.0 million respectively. The euro coins issued in the name of the Maltese Treasury rose by €3.5 million and totalled €37.9 million when compared to the euro coin stock as at the end of May 2009