Government, opposition disagree over debt statistics interpretation

Government and opposition are once again in disagreement over the interpretation of figures issued by the National Statistics Office on national debt.

While Finance Minister Edward Scicluna says that the statistics “confirm that government is managing to decrease the debt burden on the Maltese economy”, shadow finance minister Mario de Marco said that national debt shot up by a half a billion euros during the first two years of the Labour administration.

According to the NSO, general government debt stood at €5,417.4 million, or 68.0% of GDP, at end 2014. In 2013, the national debt stood at €5,241,287 – representing 69.2% of GDP.

“These figures show that the government managed to reduce the debt-to-GDP ratio by 1.2 percentage points in just one year,” Scicluna said, referring to the improvement in the debt to GDP ratio.

De Marco, while recognizing that this had its merits, called on the government to consider the wider picture, particularly the fact that in absolute terms, national debt has continued to increase. This despite the fact that Labour, when in Opposition, promised the very contrary. 

In 2012, de Marco pointed out, national debt stood at €4.9 billion: “This means that over a space of two years under Labour, the national debt shot up by half a billion Euros or 10%.”

“In percentages terms between 2011 and 2012, the last full year of the Nationalist administration, national debt increased by 1.3%. Between 2013 and 2014, the first full year of the Labour administration, national debt increased by 3.4%,” de Marco said.

According to the deputy leader, the increase in debt was not being generated by a corresponding investment in the country's infrastructure.

“It is mainly being driven by increase in the government's recurrent expenditure.  The cost of the public sector pay roll, for instance, is set to increase by €127 million over a two year period. This is due to government’s decision to increase the public sector headcount by more than 4,500 people. The expenditure of public sector entities has likewise shot up without any noticeable difference in the services offered or the level of service offered to the public. A clear example of this is the subsidy for public transport which more trebled without a tangible improvement in the service offered to the commuters.”

De Marco insisted that “a number of questionable decisions taken by government, such as the decision to bail out the operators of Cafe’ Premier and the payment meted out to Mark Gaffarena, are helping push up government’s expenditure and therefore the national debt”.

The finance minister yesterday argued that the figures showed

that the composition of the debt remains prevalently local with most of the debt having a medium to long term maturity.

“This is a positive indication on the sustainability of debt repayment,” he said.

“These positive developments complement the encouraging results recorded earlier this year in the deficit-to-GDP ratio which was further reduced to 2.1 per cent in 2014 without having to restore to any austerity measures or being detrimental to economic growth.”

Scicluna also noted that “the successful accomplishment of both the deficit and the debt targets led the European Commission to recommend Malta to be removed from the excessive deficit procedure.”