NSO confirms government surplus at 1% of GDP

Net lending (or surplus) of general government for 2016 amounted to around €101.0 million, shifting from a deficit of €119.3 million recorded in the previous year. This is calculated as the difference between total revenue (€3,871.3 million) and expenditure (€3,770.2 million) of general government, the National Statistics Office said today.

When measured as a percentage of GDP, the general government balance was equivalent to a surplus of 1.0 per cent, showing a significant improvement from a deficit of 1.3 per cent in 2015.

On the back of stock flow adjustments, the general government nominal gross consolidated debt increased by €144.4 million to €5,766.5 over 2016, however due to higher level in GDP, the debt-to-GDP ratio fell below the Maastricht debt criteria to 58.3 per cent.

The NSO explained that in order to arrive at the General Government Sector’s surplus for 2016, adjustments are made to the balance of the Government’s consolidated fund, which registered a surplus of €8.9 million.

The major positive adjustment is the net lending (or surplus) recorded by Extra Budgetary Units of €179.2 million, particularly by the setting up of the National Development and Social Fund, which receives 70 per cent of the contributions under the Individual Investor Programme, registering a surplus of €163.5 million.

In addition, another positive adjustment includes the time-adjusted cash transactions (€4.8 million).

On the other hand, the main negative adjustments to the consolidated fund included the ‘other accounts receivable and payable’ (€33.5 million), the treasury clearance fund (€24.4 million) and the equity injection to the national air carrier (€12.0 million).

On 30 March, Malta submitted its report on government deficit and debt levels for the years 2013-2016. This was done in accordance with Council Regulation (EC) No. 479/2009, as amended by Commission Regulation (EU) No. 220/2014, as well as in accordance with the Code of Best Practice adopted by the Ecofin council on 18 February 2003.

When compared to the previous submission of 30 September 2016, the deficit of the General Government was revised for all the years under review with an upward revision of €0.1 million in 2013 and a downward revision of €0.7 million and €0.9 million in 2014 and 2015 respectively.

The revisions for 2013 and 2014 were due to the availability of audited accounts for Extra Budgetary Units and for Local Councils. For 2015, the availability of audited accounts for Extra Budgetary Units resulted in a downward revision of €3.1 million, off-setting the deficit and thus, recording a surplus of around €1.0 million (for Extra Budgetary Units). Conversely, the ‘other accounts receivable/payable’ was revised upwards by €1.9 million.

With regards to General Government debt, data for 2015 was revised downwards by €0.2 million. The debt-to-GDP ratio for 2014 and 2015 were revised downwards due to higher levels in GDP.

A stock flow adjustment of 2.5 per cent of GDP was recorded in 2016. This suggests that the debt increased despite the surplus of 1.0 per cent of GDP and thus, changes in government debt are attributable to other elements. The rise in debt was mainly due to the result of an increase in the ‘holdings of currency and deposits’.

Conversely, this increase was partially offset by lower ‘other accounts receivable and payable’.