Government deficit close to €850m in first six months

By the end of June 2021, the Government’s Consolidated Fund reported a deficit of €848.9 million, the NSO said today.

In the first six months of 2021, Recurrent Revenue amounted to €2,162.1 million, 18.8 per cent higher than the €1,819.3 million reported a year earlier.

The largest increase was recorded under Income Tax (€189.7 million), followed by Social Security (€99.5 million), Value Added Tax (€99.5 million), Customs and Excise Duties (€15.4 million) and Licences, Taxes and Fines (€7.5 million).

 The rise in revenue was partially offset by decreases under Grants (€26.6 million), Miscellaneous Receipts (€25.5 million), Fees of Office (€7.3 million), Dividends on Investment (€4.4 million), Reimbursements (€2.6 million) and Rents (€2.5 million).

By the end of June 2021, total expenditure stood at €3,010.9 million, 10.9 per cent higher than the previous year. During the reference period, Recurrent Expenditure totalled €2,651.9 million, a rise of €416.9 million in comparison to the €2,235.0 million reported by the end of June 2020. The main contributor to this increase was a €326.3 million rise reported under Programmes and Initiatives. Furthermore, increases were also witnessed under Personal Emoluments (€61.7 million) and Contributions to Government Entities (€32.7 million).

The increase in expenditure was partly offset by a decrease under Operational and Maintenance Expenses (€3.9 million). The largest development in the Programmes and Initiatives category was related to the Pandemic assistance scheme (€198.9 million), which includes the COVID-19 Business Assistance Programme.

Other increases under Programmes and Initiatives were reported under Hospital concession agreements (€36.5 million), Social security benefits (€23.8 million), EU own resources (€20.8 million), Public service obligation for public transport (€17.5 million), Church schools (€13.5 million), Economic regeneration voucher scheme (€10.0 million) and Extension of school transport network (€6.3 million).

The interest component of the public debt servicing costs totalled €90.5 million, a decrease of €2.6 million when compared to the previous year. By the end of June 2021, Government’s capital spending amounted to €268.5 million, €118.3 million lower than 2020. The drop largely resulted from the reclassification of the COVID-19 Business Assistance Programme (€154.0 million), which featured under Capital Expenditure between March and December 2020 but is now classified under Recurrent Expenditure.

The difference between total revenue and expenditure resulted in a deficit of €848.9 million being reported in the Government’s Consolidated Fund at the end of June 2021. Compared to the same period in 2020, there was a decrease in deficit of €46.8 million. This difference mirrors an increase in total Recurrent Revenue (€342.8 million), largely offset by a rise in total expenditure, consisting of Recurrent Expenditure (€416.9 million), Interest (-€2.6 million) and Capital Expenditure (-€118.3 million).

Changes in expenditure and revenue reflect developments related to COVID-19. At the end of June 2021, Central Government debt stood at €7,797.8 million, a €1,421.2 million rise from 2020. Increases reported under Malta Government Stocks (€981.5 million) and Foreign Loans (€419.9 million) were the main contributors to the rise in debt. The latter increase in debt was a result of the €420.0 million EU loan from the temporary Support to mitigate Unemployment Risks in an Emergency (SURE) instrument. Higher debt was also reported under the 62+ Malta Government Savings Bond (€90.0 million) and Euro coins issued in the name of the Treasury (€1.0 million).

This rise in debt was partially offset by a decrease in Treasury Bills (€68.3 million). Finally, lower holdings by government funds in Malta Government Stocks resulted in a decrease in debt of €2.7 million.