Government reports deficit of €1.2 billion throughout 2021

By the end of 2021, the Government’s Consolidated Fund reported a deficit of €1,242.2 million, around €200 million less than 2020, as the Covid-19 pandemic and its associated crises continued to bite public funds.

In 2021, Recurrent Revenue amounted to €5,394.5 million, 22.9 per cent higher than the €4,389.3 million reported a year earlier. The largest increase was recorded under Income Tax (€554.1 million), followed by Value Added Tax (€202.4 million), Social Security (€136.0 million), Grants (€49.7 million), Customs and Excise Duties (€35.9 million), Dividends on Investments (€29.2 million), Licences, Taxes and Fines (€25.7 million), Reimbursements (€6.6 million) and Central Bank of Malta (€1.5 million). The rise in revenue was partially offset by decreases under Fees of Office (€23.9 million), Miscellaneous Receipts (€8.6 million) and Rents (€3.6 million).

By the end of 2021, total expenditure stood at €6,636.8 million, 13.3 per cent higher than the previous year.

During the reference period, Recurrent Expenditure totalled €5,718.1 million, a rise of €1,079.2 million in comparison to the €4,638.9 million reported in 2020. The main contributor to this increase was a €883.5 million rise reported under Programmes and Initiatives. Furthermore, increases were also witnessed under Personal Emoluments (€115.8 million), Contributions to Government Entities (€67.2 million) and Operational and Maintenance Expenses (€12.7 million). The largest development in the Programmes and Initiatives category was related to the Pandemic assistance scheme (€378.1 million), which includes the COVID-19 Business Assistance Programme. Other increases under Programmes and Initiatives were reported under Energy support measures (€180.0 million), EU own resources (€98.2 million), Hospital concession agreements (€38.5 million), Social security benefits (€37.8 million), St Vincent de Paul Residence service contract (€20.0 million), Waiting lists for medical services (outsourcing) (€13.8 million), Church schools (€10.7 million), Residential care in private homes (€9.3 million), Extension of school transport network (€7.8 million), Interest rate subsidy scheme (€7.2 million), Allocation in respect of local councils (€6.0 million), Chief medical officer medicines (€6.0 million), Tax relief measures (€5.8 million), Grant for electric vehicles (€5.5 million) and Child care for all (€4.8 million).

The interest component of the public debt servicing costs totalled €183.8 million, an increase of €2.6 million when compared to the previous year.

By the end of December 2021, Government’s capital spending amounted to €734.9 million, €302.3 million lower than 2020. The drop largely resulted from the reclassification of the COVID-19 Business Assistance Programme (€384.2 million), which featured under Capital Expenditure between March and December 2020 but is now classified under Recurrent Expenditure. This decline outweighed an increase of €81.9 million reported in other capital projects.

The difference between total revenue and expenditure resulted in a deficit of €1,242.2 million being reported in the Government’s Consolidated Fund at the end of 2021. Compared to the same period in 2020, there was a decrease in deficit of €225.7 million. This difference mirrors an increase in total Recurrent Revenue (€1,005.2 million), partially offset by a rise in total expenditure, consisting of Recurrent Expenditure (€1,079.2 million), Interest (€2.6 million) and Capital Expenditure (-€302.3 million). Changes in expenditure and revenue reflect developments related to COVID-19.

At the end of 2021, Central Government debt stood at €8,097.4 million, a €1,332.2 million rise from 2020. Increases reported under Malta Government Stocks (€995.0 million) and Foreign Loans (€299.9 million) were the main contributors to the rise in debt. Higher debt was also reported under the 62+ Malta Government Savings Bond (€94.4 million) and Euro coins issued in the name of the Treasury (€3.1 million). This increase in debt was partially offset by a decrease in Treasury Bills (€44.6 million). Finally, lower holdings by government funds in Malta Government Stocks resulted in a decrease in debt of €15.6 million.