Malta has registered the second-highest deficit across the EU in 2020, Eurostat figures show. Despite this, it was one of 13 countries to remain below the 60 per cent threshold.
The deficit refers to the difference in the Government’s everyday expenses and revenues, and the 2020 scenario is indicative of the impact COVID-19 has left on public coffers.
On Thursday, Eurostat released figures showing Malta ranked second with a deficit of 10.1 per cent, while Spain came in first at 11 per cent.
Indeed, increased Government expenditure on COVID-19 support schemes, mitigation measures and supplies, among other expenses, and the resulting drop in revenue stemming from reduced economic activity, saw all 27 EU countries register deficits.
COVID-19 has put a damper on the Labour Government’s three-year stint where it registered surpluses. A key selling point for the Labour Government, elected into power back in 2013, and reconfirmed in 2017, has been its success in strengthening state finances.
At a press conference outlining the impact of COVID-19 on Government revenue and expenditure for 2020 and 2021, Finance Minister Clyde Caruana revealed that the pandemic is impacting public finances to the tune of €5 million a day.
He also said the deficit is projected to reach 12 per cent in 2021, over double the 5.9 per cent initially projected.
He added that both 2020 and 2021 were previously expected to generate surpluses, emphasising the profound impact of the pandemic on Government finances.
He singled out the plight of the tourism industry as a key contributor to this sharp decline.
Eurostat figures also show that Malta had the 10th lowest debt-to-GDP ratio in 2020, at 54.3 per cent, and was one of 13 countries to remain below the 60 per cent threshold.
Across the EU, the debt-to-GDP ratio went from 77.5 per cent in 2019 to 90.7 per cent in 2020.
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