Government deficit jumps over €1 billion in first seven months – NSO

Between January and July 2020, the Government’s Consolidated Fund reported a deficit of €1,051.8 million, the NSO said. This is mostly as a result of the effects of Covid-19, which resulted in increased expenditure and less revenues for the government.

By the end of July 2020, recurrent revenue totalled €2,106.1 million, a 20.2 per cent drop from the €2,638.6 million reported in revenue between January and July 2019. Income Tax exhibited the largest decrease at €206.7 million.

Additional drops were also witnessed under 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). In contrast, increases were 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 per cent 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 benefi ts), 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 offset 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. The diff erence 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 defi cit 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). Decreases in revenue and increases in expenditure reflect developments related to COVID-19.

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.