High spending leads to growing Government deficit in first three months of 2022

The Maltese Government registered a deficit of €402.1 million in the first three months of 2022, as increases in spending outstripped higher revenues from increased economic activity. This is the first time the quarterly deficit has ever topped €400 million.

A news release from the National Statistics Offices (NSO) reveals that total expenditure in the first quarter of 2022 amounted to €1.69 billion, an increase of €178.2 million over the corresponding quarter in 2021.

The largest increase was recorded in social benefits and social transfers in kind (€71.8 million), followed by current transfers payable (€51.9 million) and intermediate consumption (€45.8 million). Other increases were registered in capital transfers payable (€8.1 million), compensation of employees (€5.2 million) and subsidies payable (€2.0 million).

These increases were partially offset by decreases in gross capital formation (€3.5 million) and property income payable (€3.1 million).

Meanwhile, total revenue during the period January to March 2022 stood at €1.29 billion, an increase of €141.4 million when compared to the corresponding quarter in 2021.

Almost all components of Government revenue recorded an increase, with current taxes on income and wealth registering an increase of €86.1 million over the same period in 2021. This was followed by taxes on production and imports (€63.8 million), market output (€31.9 million), net social contributions receivable (€20.3 million), and current transfers receivable (€0.7 million).

In contrast, capital transfers receivable and property income receivable decreased by €54.8 million and €6.6 million, respectively.

Quarterly financial accounts

In relation to financial transactions in assets, during the first quarter, other accounts receivable and currency and deposits registered an increase of €115.1 million and €40.7 million, respectively. On the other hand, equity and investment fund shares recorded a decrease of €3.1 million, while long-term loans declined by €0.6 million.

Considering the financial transactions in liabilities, the highest increase was recorded in long-term debt securities (€229.7 million), followed by other accounts payable (€177.0 million), short-term debt securities (€161.4 million) and long-term loans (€1.6 million). In contrast the only decrease was registered in currency and deposits (€1.9 million) (Table 8).

At the end of March, Government debt stood at €8,672.2 million, or 57.6 per cent of GDP.

Quarterly debt

Equating to an increase of €1.175 billion over the corresponding quarter in 2021, largely reflected in central Government debt, which amounted to €8,669.9 million. Currency and deposits stood at €567.3 million, an increase of €98 million over March of 2021. This includes euro coins issued in the name of the Treasury, considered a liability of Central Government, and the 62+ Malta Government Savings Bond, the latter amounting to €376.7 million.

Long-term debt securities and long-term loans increased by €863.2 million and €186 million, respectively. Short-term debt securities increased by €27.2 million, while short-term loans increased by €0.5 million. Local Government debt stood at €2.3 million.

General Government guaranteed debt amounted to €1.15 billion at the end of March 2022, equivalent to eight per cent of GDP . There was a decrease of €33.4 million when compared to the first quarter of 2021.