Grants down by €114m, capital spending down as EU funds period closes

The government’s consolidated fund has registered a shortfall of €27.2 million in the January-February 2016 period.

Compared to the first two months of last year, recurrent revenue fell by €64 million, while spending increased by €12.9 million – widening the shortfall by €76.9 million.

In January-February, recurrent revenue was recorded at €546 million, down from €610 million last year. The major contributors to the comparative decrease of 10.5 per cent were lower proceeds from grants by €114.9 million.

Conversely, major increases were recorded in Customs and Excise duties (€16.2 million), Social Security (€13.7 million), Licenses, Taxes and Fines (€8.7 million) and Value Added Tax (€6.4 million).

Finance minister Edward Scicluna said it was “encouraging to note that while expenditures are within budget, tax revenues are still outperforming our projections.” He said that spending was within budget, and that non-tax revenue falls reflected the close of the EU funds period and the start of the 2014-2020 funding ptrogramme. "These reductions would be neutralised by lower EU-funded capital spending."

Jan -Feb public expenditures within budget while tax revenue outperforming budget projections.

— Prof Edward Scicluna (@edward_scicluna) March 24, 2016

Massive drop in government revenues while expenditure soars. Tax on fuel avoids even bigger losses for... https://t.co/ElkrsgUrcr

— Mario de Marco (@TeamMDM) March 24, 2016

Compared to January-February last year, total expenditure went up by €12.9 million mainly as result of higher spending on recurrent expenditure, which were partially outweighed by lower outlays on capital projects.

Recurrent expenditure stood at €504.7 million from €461 million last year. This was the result of higher contributions to government entities by €20.8 million followed by added outlays on programmes by €11.8 million.

The major developments in the latter category involved higher social security benefits (€12.9 million) and an increase in the social security state contribution, which also features as revenue (€4 million). These were partially offset by lower EU Own Resources (€7.9 million). Personal emoluments and operational expenses increased by  €5.7 million and €5.3 million respectively.

Public debt interest costs stood at €36.2 million, up from €35.9 million last year.

Capital spending went down by €31.1 million to €32.3 million. This fall was primarily due to the closure of the EU funds programming period 2007-2013.

At the end of February 2016, the national debt stood at €5,651.6 million, up by €452.3 million over the corresponding period last year. This was the result of higher Malta Government Stocks and Treasury Bills, which added €325.7 million and €129.2 million respectively. On the other hand, foreign loans went down by €10.6 million.

Holdings in Malta Government Stocks remained almost at the same level of last year. The Euro coins issued in the name of the Treasury went up by €8.1 million when compared to the coin stock as at the end of February 2015, and totalled €68.2 million.