Deficit shrinks as Government income recovers

Malta’s Government deficit as at the end of November 2022 is far lower than it was at the same point last year, as a recovering economy significantly boosted state revenue and offset an increase in public expenditure.

By the end of November 2022, the Government’s Consolidated Fund reported a deficit of €620.5 million, a decrease of €487.1 million over the deficit reported at the end of November 2021.

Between January and November 2022, recurrent revenue amounted to €5.1 billion, 12.2 per cent higher than the €4.6 billion reported a year earlier. The largest increase was recorded under Value Added Tax (€236.0 million), followed by Income Tax (€190.6 million), Social Security (€141.0 million), Grants (€52.0 million), Reimbursements (€7.5 million), Rents (€2.9 million) and Licences, Taxes and Fines (€2.1 million). The rise in revenue was partially offset by decreases under Miscellaneous Receipts (€28.8 million), Customs and Excise Duties (€20.6 million), Central Bank of Malta (€10.9 million), dividends on investment (€9.5 million) and fees of office (€7.8 million).

By the end of November 2022, total expenditure stood at €5.7 billion, €67.3 million higher than the previous year.

During the reference period, recurrent expenditure totalled €5 billion, an increase of €134.8 million in comparison to the €4.88 billion reported during the corresponding period in 2021.

The main contributor to this increase was a €102.3 million rise reported under programmes and initiatives. Furthermore, increases were also witnessed under personal emoluments (€25.2 million) and contributions to Government entities (€18.6 million).

This rise in expenditure outweighed a decrease under operational and maintenance expenses (€11.3 million). The main developments in the programmes and initiatives category involved added outlays towards energy support measures (€140.9 million), economic stimulus payments (€47.5 million), carbon credits (€40 million), social security benefits (€39.4 million) and COVID-19 supplies (€38.8 million). This rise in programmes and initiatives was partly offset by a decrease under the pandemic assistance schemes (€200.7 million).

The interest component of the public debt servicing costs totalled €156.5 million, a decrease of €10.7 million when compared to the previous year.

By the end of November 2022, Government’s capital spending amounted to €554.1 million, €56.8 million lower than 2021. This decrease resulted from lower expenditure towards road construction and improvements (€34 million), property, plant and equipment (€15.9 million), Gozo Aquatic Centre (€9.6 million) and acquisition of property for public purposes (€6.3 million). The drop in capital outlay was partially offset by an €11.8 million increase witnessed under film industry incentives.

The difference between total revenue and expenditure resulted in a deficit of €620.5 million being reported in the Government’s Consolidated Fund at the end of November 2022. Compared to the same period in 2021, there was a decrease in deficit of €487.1 million. This difference mirrors an increase in total recurrent revenue (€554.4 million), partly offset by a rise in total expenditure, which consists of recurrent expenditure (€134.8 million), interest (-€10.7 million) and capital expenditure (-€56.8 million).

At the end of November 2022, central Government debt stood at €8.86 billion, an increase of €707.5 million from 2021. The increase reported under Malta Government Stocks (€669.4 million) was the main contributor to the rise in debt.

Higher debt was also reported under Treasury Bills (€213.5 million) and Euro coins issued in the name of the Treasury (€4.9 million).

This increase in debt was partially offset by a decrease in the 62+ Malta Government Savings Bond (€99.7 million) and Foreign Loans (€0.1 million). Finally, higher holdings by Government funds in Malta Government Stocks resulted in a decrease in debt of €80.5 million.