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Lower take-up of EU funds in 2011, increased debt in 2012
Positive aspects of ‘cautious’ budget underpinned by dampened capital spending in 2011 and increased debt.
15 November 2011, 12:00am
Matthew Vella
Matthew Vella
2 min read
Tonio Fenech's family budget saw less money being spent in capital projects this year.
Finance Minister Tonio Fenech's Budget 2012's political overtones will certainly not be ignored by the middle-class electorate that will benefit from the obvious hallmarks: a parent tax band, increased tax credits for private school, and banking incentives for SMEs.
But on top of the fiscal measures, the overall strategy of this year's spending is characterised by a drastic 30.7% cut in capital expenditure, and government seeking €700 million in local loans - an increase in 22% over 2011.
Last year, Fenech said the government would spend €446 million in capital projects, but this evidently took a back-seat with €143 million less being spent and more projects being postponed throughout the year.
The European Commission on its part says this reflects a "weak absorption of EU Funds". The budget speech offers clues into where spending was cut.
€20 million in structural EU Funds for example, will not be taken up by the Office of the Prime Minister. Austin Gatt's investment ministry, troubled by the public transport reform this year, did not managed to take up €58 million in EU structural and cohesion funds, Malta Freeport works, and road building works funded under EU auspices.
The low take-up of EU funds is a similar trait across other ministries: €27 million less spending by the rural affairs ministry, €21 million less in structural funds and the construction of the ICT faculty at the University of Malta by the education ministry, and another €12 million less spending by the health ministry in structural funds.
Another crucial aspect of Budget 2012 will be the increase in local loans by the government, expected to reach €570 million in 2011 but increase by 22% to €700 million in 2012. Total national debt will total €4.67 billion in 2012.
Discrepancies exist between the Maltese government's and the European Commission's projections for 2012.
Government says debt will be 68.9% of gross domestic product in 2012. But the EC says this will reach 70.8% in 2012 and 71.3% in 2013, while the government claims the debt will keep on reducing as a percentage of GDP. The EC says its projections are based on a deterioration in the primary balance.
Matthew Vella, a freelance journalist at MaltaToday, was formerly executive editor at Malt...
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These guys in the Government do not give a damned thing about the Public Debt and financial problems Malta is facing. If GonziPN do not win the next General Election they just go to the Opposition benches and continue to live a luxurious life over our taxes whilst the people have to continue suffer on their mistakes. Lynching these Ministers after all can be legitimate and justified.
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A budget full of crap,what about energy and fuel bills, Tonio hardly mentioned these.
The 4billion euro this country has in debt,it`s going to eat us alive.
Well done Gonzipn you are a true leader,with your PAR IDEJN SODI,looks like they never were sodi.
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How about the ex british service men we are still deprived what belongs to us. The money is THERE and its going somewhere else! We paid for it! We are not asking for €500 per week. What we want is what we are entiled for no more no less. I know of people who are millioners yet they get the full pension! Hope all the people concerned and their families will remember all this when it comes to vote!
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Budget kollu ghaqal. GHAL BUTHOM IMMA.
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It's going to drive up borrowing cost, and starve businesses of credit, thank you GOV.
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Budget of business as usual (bau). Nothing has really improved for the vast majority of us and the government has once again managed to paint a cosmetically nicer picture of the financial situation of the coffers.
At the end of the day, the preoccupying national debts are still very much hanging on the head of each and every one of us and our future generations.
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The government have driven the country and the people deep into debts,that can never be paid.
Mark Fenech •
Budgets in Malta are not worth the paper they are written on, for they are not on accrual basis. They are simply on cash basis. The government may leave a lot of bills pending and says it is reducing the deficit, when actually, that is not the case.
Only when budgets are on accrual basis that they would have a substance.
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Does the word “Solidarity” mean solidarity with the Government MP’s families only?
Does Hon Gonzi mean that giving the Maltese families a mere €4.66 a week is called solidarity when he himself and his untalented bunch took €500 weekly?
To be honest how much of it is going to remain in our pockets after deducting NI and Income Tax?
This isn’t enough to cover the cost of a gas cyclinder let alone to make up for water and electricity bills, fuel cost, food prices, bus fares etc etc.
Make hay while the sun shines, then you have to endure the failure of your doings
