Malta government surplus hits 3.9% of GDP

Malta’s headline economic figures continue to flourish with the latest results showing a general government surplus of €436.6 million last year.

The surplus was equivalent to 3.9% of GDP, figures released today by the National Statistics Office show.

Half of the surplus came from the National Development and Social Fund, which is financed by income from the sale of Maltese passports to wealthy foreigners.

The sale of passports to wealthy foreigners is half the reason for a surplus of €436.6 million in 2017

The NSO said the national fund, which receives 70% of proceeds from the Individual Investor Programme, registered a surplus of €199.7 million.

But the numbers were also boosted by the central government’s surplus of €182.7 million.

The NSO said general government debt stood at €5.6 billion, or 50.8% of GDP. This represents a significant drop in relative terms of the country’s debt, which in 2014 was 63.8% of GDP.

EXPLAINER:

How did we go from a surplus of €182.7 million to €436.6 million in a just few weeks?

This is no fluke. The NSO publishes two sets of statistics concerning public funds.

The first takes into account the central government accounts. These figures, which were released a few weeks ago, take into account ordinary revenue, for which read taxes, and expenditure. They exclude public agencies, local councils and the National Development and Social Fund.

The central government statistics showed that the country had registered a surplus of €182.7 million in 2017. This also included around €40 million from the passport scheme, which represents the portion of funds that are included in the Finance Minister’s yearly Budget plans.

The central government surplus was primarily a result of the fast-growing economy, which enabled the government to collect more in taxes without the need to increase them.

The second set of statistics, released today, capture the results for the extended government. This means that income, expenditure and debt of government agencies, authorities and local councils is also included into the equation.

NSO infographic

These are the figures that are the most relevant when determining whether Malta has fulfilled the Maastricht criteria applied to Eurozone countries.

These figures also include the bulk of funds derived from the passport scheme, which are hived off into a separate fund that acts, in many ways as a savings account for the country.

 The latest figures show the country with a surplus of €436.6 million in 2017, equivalent to 3.9% of GDP.

The Maastricht criteria stipulate that a country’s deficit should be less than 3% of GDP, however, Malta has for the past two years, turned its deficit into a surplus. The general government surplus in 2016 stood at €101 million.