Government deficit exceeds €1 billion in first eight months – NSO

Between January and August 2020, the Government’s Consolidated Fund reported a deficit of €1,086.2 million, the NSO said today.

By the end of August 2020, recurrent revenue amounted to €2,524.8 million, 20.9 per cent lower than the €3,190.2 million reported in revenue up to the end of August 2019. Income Tax exhibited the largest decrease at €235.3 million.

Additional drops were also witnessed under Value Added Tax (€177.3 million), Grants (€84.6 million), Customs and Excise Duties (€84.5 million), Social Security (€72.8 million), Licences, Taxes and Fines (€59.8 million), Reimbursements and Rents (both €7.7 million). In contrast, increases were reported under Fees of Office (€30.6 million), Miscellaneous Receipts (€29.9 million) and Dividends on Investment (€4.0 million).

Between January and August 2020, total expenditure amounted to €3,611.1 million, 16.3 per cent higher than the corresponding period in 2019. During the period under review, recurrent expenditure totalled €2,965.1 million, a rise of €298.4 million when compared to the €2,666.8 million reported in 2019. The main contributor to this increase was a €135.3 million rise reported under Programmes and Initiatives.

Furthermore, increases in outlay were also registered by Contributions to Government Entities (€102.4 million), Operational and Maintenance Expenses (€41.4 million) and Personal Emoluments (€19.3 million). The main developments in the Programmes and Initiatives category involved added outlays towards Social security benefits (€50.7 million, of which €14.5 million were spent on COVID-19 social benefits), Medicines and surgical materials (€45.4 million), the Economic regeneration voucher scheme (€30.9 million), Church schools (€22.5 million), Public service obligation for public transport (€10.1 million), Housing programmes (€7.0 million), Compensation payments, Extension of the school transport network (both €5.4 million) and Waiting lists for medical services (€4.1 million).

The rise in expenditure was partially offset by drops reported under Social security state contribution (€28.3 million, also reported as revenue) and EU own resources (€18.2 million). The interest component of the public debt servicing costs totalled €121.3 million, a €5.2 million decrease from the same period in 2019. By the end of August 2020, Government’s capital spending amounted to €524.6 million, a rise of €211.6 million from 2019, largely due to additional spending towards investment incentives (€213.0 million), which amounted to €237.1 million, including €229.0 million spent in relation to the COVID-19 Business Assistance.

Property, plant and equipment spending also rose by €38.8 million. On the other hand, there were drops reported under Contribution towards Treasury clearance fund (€19.9 million) and in projects financed by EU Internal security fund – Borders and Visa (€14.4 million) and EU Structural funds 2014-2020 (€7.2 million). The difference between total revenue and expenditure resulted in a deficit of €1,086.2 million being reported in the Government’s Consolidated Fund by the end of August 2020. This represented an increase in deficit of €1,170.1 million when compared to the surplus of €83.9 million witnessed during the same period in 2019. This difference mirrors an increase in total expenditure, consisting of recurrent expenditure (€298.4 million), interest (-€5.2 million) and capital expenditure (€211.6 million), in addition to a drop in recurrent revenue (€665.3 million).

Decreases in revenue and increases in expenditure reflect developments related to COVID-19. At the end of August 2020, Central Government debt stood at €6,599.1 million, a €1,179.7 million rise from the previous year. Increases reported under Malta Government Stocks (€587.3 million) and Treasury Bills (€502.7 million) were the main reasons for the rise in debt. Higher debt was also reported under the 62+ Malta Government Savings Bond (€91.5 million) and Euro coins issued in the name of the Treasury (€2.9 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 €4.6 million.