Deficit down in second quarter, debt pushed to €5 billion

The deficit recorded by the General Government for the second quarter this year amounted to €69.4 million, a decrease of €21.5 million from the corresponding period in 2011.

During April-June 2012, total revenue stood at €654.8 million, an increase of €60.4 million when compared to the second quarter of 2011. The main contributors were 'current taxes on income and wealth' ( €45.1 million) and 'taxes on production and imports' ( €9.5 million).

Other increases were recorded in 'social contributions receivable' ( €3.5 million), 'current transfers receivable' ( €2.2 million) and 'property income receivable' ( €1.5 million). Conversely, 'market output' declined by €2.0 million.

Total expenditure in the second quarter amounted to €724.2 million. 'Social benefits and social transfers in kind' went up by €31.4 million. Moreover, higher outlays were recorded on 'intermediate consumption' ( €12.2 million), 'compensation of employees' ( €9.6 million), 'current transfers payable' ( €6.7 million), 'capital transfers payable' ( €4.9 million) and 'property income payable' ( €4.0 million). These were partially offset by lower expenditure on 'gross capital formation' (-€28.9 million) and 'subsidies payable' (-€1.0 million).

During the quarter under review, all financial transactions in assets registered an increase. The main additions were recorded in 'currency and deposits' and 'long-term loans' by €58.8 million and €43.4 million respectively. Concurrently, 'other accounts receivable' went up by €20.1 million whereas 'shares and other equity' rose by €11.2 million. 'Short-term loans' increased marginally by €0.9 million.

With regard to financial transactions in liabilities, 'long-term securities' advanced by €93.5 million whereas 'short-term securities' went up by €38.0 million. Moreover, 'long-term loans' and 'short-term loans' increased by €33.8 million and €1.9 million respectively. Higher 'other accounts payable' by €43.2 million and 'currency and deposits' by €1.8 million were recorded.

Total General Government debt outstanding at the end of June advanced by €473.2 million over the comparable period in 2011. General Government debt amounted to €5,008.2 million, of which €5,004.0 million relates to Central Government. The increase of €472.9 million in Central Government debt was underpinned by higher long-term securities (Malta Government Stocks) of €451.1 million and an increase in total loans of €99.4 million, mainly due to the EFSF rerouted debt.

Conversely, short-term securities declined by €82.1 million. The euro coins issued in the name of the Treasury, which are considered as a currency liability pertaining to the Central Government, amounted to €47.0 million, a rise of €4.5 million over the euro coin stock recorded at the end of June 2011. In addition, the Local Government debt edged up by €0.4 million and stood at €4.2 million.

In 2011, General Government net borrowing (or deficit) was recorded at €177.0 million, down from €224.5 million for 2010. Last year, the General Government deficit was equivalent to 2.7 per cent of GDP, down from 3.6 per cent for 2010.

At the end of 2011, the General Government nominal gross consolidated debt amounted to €4,607.4 million, or 70.9 per cent of GDP, up from €4,257.7 million, or 68.3 per cent for 2010.

2011 data: The balance of the Government's consolidated fund, amounting to -€218.6 million (published in news release 63/2012) is adjusted to arrive at the General Government Sector's deficit for 2011.

Positive adjustments included the time-adjusted cash transactions ( €39.9 million) and the non-financial transactions in the treasury clearance fund ( €24.4 million). On the other hand, the main negative adjustments were other accounts receivable and payable (-€16.9 million) and other financial transactions (-€7.4 million).

On 28 September, Malta submitted its report on government deficit and debt levels for the years 2008-2012. Compared to the previous submission of 30 March, the following updates were made:

- Reclassification of Property Management Services Ltd within the General Government Sector. This had a negative impact on the deficit, mainly in 2009 by €8.0 million, and also triggered a revision in government debt levels for 2009 ( €8.0 million), 2010 ( €7.0 million) and 2011 ( €6.0 million).

- The availability of audited financial statements for the Extra Budgetary Units resulted in a revision in government deficit for 2009 ( €0.3 million) and 2011 (-€3.1 million). This impacted on gross consolidated debt for 2009 (-€0.4 million) and 2011 ( €0.8 million).

- Local Councils were adjusted according to the latest audited financial statements, which led to a downward revision of the net borrowing of general government for 2010 (-€0.1 million) and 2011 (-€0.6 million). Their debt levels for 2011 were revised upwards by €0.3 million.

- Updated accruals adjustments resulted in revisions in other accounts receivable and payable with net positive impact on government deficit by €3.4 million in 2010 and €0.8 million in 2011.