€51.5 million increase in Government debt in 2019

Money in pocket

At the end of 2019, General Government debt amounted to €5,695.6 million or 43.1% of GDP which means an increase of €51.5 million over 2018.

According to the data published by the National Statistics Office, in 2019, the Financial Corporations sector held the biggest share of debt with 59.2% followed by Households and Non-Profit Institutions Serving Households (NPISH) with 23.5%. The share of the Rest of the World was 15.2%, an increase of 4.6 percentage points over the debt held in 2016.

The Non-Financial Corporations sector held 2.1% of the debt.

NSO

Debt Securities, which include Malta Government Stocks and Treasury Bills, are by far the preferred debt instrument for General Government, with €4,915.5 million or 86.3% of the total debt in 2019. Other debt instruments consist of Loans and Currency with 7.0% and 6.7% respectively.

The increases reported under Currency in 2017, 2018 and 2019 relate to the introduction of the 62+ Malta Government Savings Bonds.

Data shows that almost all the debt owed by the General Government Sector is in national currency. The stock of debt in foreign currencies has decreased considerably over the years and in 2019 it amounted to €0.1 million.

The apparent cost of debt, which is the interest rate applicable to the whole nominal debt, was 3.2% in 2019 compared to 3.8% for 2016. This measure of the cost of debt reflects the interest rates prevailing at the issuance date and given that the composition of debt is predominantly long-term, the indicator is not very sensitive to the most recent low interest rate scenario.

According to NSO, in 2019, the market value of the total General Government debt is estimated at €6,940.8 million compared to the nominal value of €5,695.6 million. On account of the positive performance of the

Debt Securities in the local financial market, the market debt increased by €388.1 million over 2018, as compared to an increase of €51.5 million in nominal debt.

In the data published it was explained that for the year under review, the time structure of the debt by initial maturity shows that €3,036.4 million, or 53.3%, was issued with a maturity of 15 to 30 years. This was followed by debt issued for 5 to 7 years, 12.6%, 10 to 15 years, 10.3%, 1 to 5 years, 7.8% and 7 to 10 years and less than 1 year both at 7.3%.

Also, the average remaining maturity of total debt for 2019 was 8 years 10 months, the same level as in 2018 but 10 months shorter than in 2016. In 2019, the biggest share of debt by remaining maturity was in the 1 to 5-year category with €1,605.4 million, followed by the 10 to 15-year (€1,303.9 million) and the less than 1-year (€873.7million) categories.

Government guarantees on borrowing amounted to €990.3 million in 2019, or 7.5% of GDP, a decrease of €80.8 million over 2018.

NSO said that the majority of Government guarantees are issued to the Non- Financial Corporations sector, which accounts for 73.3% of the total guarantees. The Financial Corporations and NPISH sectors benefitted from 25.7 and 1.0%, respectively, of Government guarantees.

The Government guarantees are contingent liabilities, contingent on the actual call of the guarantee, and therefore these do not form part of General Government debt.