Government deficit hits €1 billion mark

The National Statistics Office said that the Government’s Consolidated Fund reported a deficit of €1,051.8 million or €1.051 billion between January and July 2020. The increase resulted mainly from the effects of the coronavirus pandemic which led to an increase in government’s expenditure and less revenues.

The difference between total revenue and expenditure resulted in a deficit of €1,051.8 million being reported in the Government’s Consolidated Fund by the end of July 2020. This represented an increase in deficit of €925.9 million when compared to the deficit of €126.0 million witnessed during the same period in 2019. This difference mirrors an increase in total expenditure, consisting of recurrent expenditure (€200.1 million), interest (-€2.5 million)
and capital expenditure (€195.8 million), in addition to a drop in recurrent revenue (€532.5 million), the NSO reported.

The recurrent revenue totalled €2,106.1 million, registering a 20.2% drop from 2019 when compared to the period between January and July 2019. Income Tax exhibited the largest decrease at €206.7 million.

Other drops which were registered include the Value Added Tax (€115.3 million), Grants (€78.1 million), Social Security (€61.9 million), Customs and Excise Duties (€56.3 million), Licences, Taxes and Fines (€55.9 million), Rents (€9.5 million) and Reimbursements (€7.0 million).

The NSO noted that an increase was reported under Miscellaneous Receipts (€27.0 million), Fees of Office (€25.3 million) and Dividends on Investment (€6.0 million).

Between January and July 2020, total expenditure amounted to €3,158.0 million, 14.2% higher than the corresponding period in 2019.

During the period under review, recurrent expenditure totalled €2,573.2 million, a €200.1 million increase from the €2,373.1 million reported in 2019. The main contributor to this increase was a €112.9 million rise reported under Programmes and Initiatives. Furthermore, increases in outlay were also registered by Contributions to Government Entities (€45.7 million), Operational and Maintenance Expenses (€25.1 million) and Personal Emoluments (€16.5 million). The main developments in the Programmes and Initiatives category involved
added outlays towards Social security benefits (€46.8 million, of which €14.5 million were spent on COVID-19 social benefits), Medicines and surgical materials (€42.7 million), Church schools (€8.1 million), Public service obligation for public transport (€7.4 million), Feed-in-tariff (€7.2 million), Street lighting (€5.4 million), Extension of the school transport network (€5.2 million), Compensation payments (€4.9 million), Solid waste management strategy (€4.5 million) and Waiting lists for medical services (€3.7 million). The rise in expenditure was partially off set by a reported decrease in Social security state contribution (€26.6 million, also reported as revenue).

The interest component of the public debt servicing costs totalled €106.6 million, a €2.5 million drop from the same period in 2019.

By the end of July 2020, Government’s capital spending amounted to €478.2 million, a rise of €195.8 million from 2019, largely due to additional spending towards Investment incentives (€193.1 million), which amounted to €217.0 million, including €209.0 million spent in relation to the COVID-19 Wage Supplement. Further increases were recorded in Property, plant and equipment (€34.1 million), Road construction and improvements (€9.5 million), ICT – support (€6.0 million) and the EU agricultural fund for rural development 2014-2020 (€4.1 million). On the other hand, there were drops reported under the Contribution towards Treasury clearance fund (€19.9 million), as well as under the EU Cohesion (€15.6 million) and Structural (€15.2 million) funds 2014-2020.

By the end of July 2020, Central Government debt stood at €6,624.2 million, a €1,173.0 million rise from the previous year. Increases reported under Malta Government Stocks (€587.3 million) and Treasury Bills (€497.2 million) were the main reasons behind the rise in debt.

Higher debt was also reported under the 62+ Malta Government Savings Bond (€91.6 million) and Euro coins issued in the name of the Treasury (€3.7 million). In contrast, lower debt was registered under Foreign Loans (€0.1 million). Higher holdings by government funds in Malta Government Stocks also resulted in a decrease in debt of €6.7 million.