End-of-July government deficit at over €800 million

The Government Consolidated Fund registered a deficit of €882.5 million by end of July 2021, figures from the National Statistics Office (NSO) reveal.

Government’s recurrent revenue amounted to €2.6 billion in the first seven months of the year, with the largest increase recording under income tax and VAT, standing at €283.8 million and €125.4 million respectively.

However, the rise in revenue was partially offset by decreases under grants and miscellaneous receipts.

Meanwhile, recurrent expenditure totalled at above €3 billion during the same period – a rise of €499.6 million compared to figures  for the previous year.

The main contributor to this increase was a €388.2 million rise in programmes and initiatives. A further increase was reported under personal emoluments to government employees, which stood at €62.5 million.

According to the NSO, the largest development in the programmes and initiatives category was related to the pandemic assistance scheme, totalling €231.4 million.

The interest component of the public debt servicing costs decreased by €3.1 million compared to the previous year, now standing at €103.5 million.

Government’s capital spending dropped by €155.4 million compared to 2020, largely as a result of the reclassification of the COVID-19 Business Assistance Programme. This €154 million programme featured under capital expenditure between March and December 2020 but now falls under Recurrent Expenditure.  

At the end of July, Central Government debt totalled €7.8 billion. This marked a €1.2 billion rise from 2020 figures, mainly due to increases in Malta Government Stocks and foreign loans. The increase in foreign loans is a result of the €420 million EU loan from the temporary Support to mitigate Unemployment Risks in an Emergency (SURE) instrument.

Government revenues have remained steady over the years, but COVID-19 has forced governments world-over to spend more on alleviating the economic burden of the pandemic.

GDP gains a boost

In a separate release, the National Statistics Office estimate that GDP for the second quarter of 2021 amounted to €3.4 billion, or a 14.8% increase compared to the same quarter of 2020. 

This while GDP rose by 13.4% in volume terms during the same period. 

Looking at the production approach, GDP grow by 12.3% in volume terms.  The main drivers behind this growth were service activities, industry, and construction activity, all contributing to 10.7 percentage points of growth.

The increase in services was driven by wholesale and retail trade, entertainment and recreation activities, financial and insurance activities, finformation and comunication activities, and accommodation and food service activities.

The latter category experienced an increase of 165.4%.

Total final consumption expenditure saw an increase of 8.9% in volume terms, resulting from an increase in household expenditure and spending by non-profit institutions serving households.