COVID takes deficit up to €1.4 billion in 2020

The Maltese government has reported a €1.4 billion deficit in 2020, in a year that saw COVID-19 impacting tax revenues, shutting down businesses, and forcing the government in an emergency disbursement of wage supplements.

The government took 11.7% less revenues – €4.3 billion – owing to drops of €229m in income tax, €177m in VAT, €74m in grants, €67m in customs and duties, and various other revenues. The drop was marginally offset by increases from fees of office, social security and other receipts.

Total spending climbed by 18% to €5.8 billion in 2020, of which recurrent spending was €4.6 billion, an increase of €422m.

The main contributor to this increase was €276m in programmes, €89m to government entities, and €19m in personal emoluments. Programmes and initiatives included €79m for social security, €14.5m of which was related to COVID-19; €49.2m in medicines; €45m for COVID vouchers; and more in health spending.

By the end of December 2020, government’s capital spending amounted to €1 billion, or €482.1 million higher than 2019, largely due to additional spending towards investment incentives (€406.7 million). These incentives amounted to €434m, of which €384m was spent in relation to the COVID-19 Business Assistance Programme.

The difference between total revenue and expenditure resulted in a deficit of €1,467.9 million, an increase in deficit of €1,477.3 million when compared to the surplus of €9.4 million of 2019.

This difference mirrors an increase in €422m in recurrent spending, a drop of €11m in public debt servicing, and a €482m increase in capital spending, apart from the €583m drop in income – reflecting the effect of COVID-19 on the Maltese economy.

Central Government debt stood at €6.7 billion, a €1.4 billion increase from a rise of €873 million in Malta stocks, €344m in treasury bills, and a €120m EU loan from the Support to mitigate Unemployment Risks in an Emergency (SURE) instrument.