Deficit, debt, ordinary revenue, total expenditure all up in first six months

The structural deficit between ordinary revenue and total expenditure in the first six months this year amounted to Lm78.5 million, up from a deficit of Lm53.9 million for the same period last year, the National Statistics Office said yesterday. The figure does not include contribution to the sinking fund in respect of local and foreign loans as well as less direct repayment of loans.

Provisional statistics supplied by the Central Bank of Malta also report that government debt outstanding at the end of June stood at Lm1,049.6 million, up by Lm75.5 million, or 7.8 per cent, from the amount outstanding at the end of June last year.

Compared to the first half of 2001, ordinary revenue in the first six months this year increased by Lm10.5 million, or 3.4 per cent and amounted to Lm318.6 million. Ordinary revenue made up 43.3 per cent of this year's budget forecast.

At the same time, total expenditure amounted to Lm402.7 million, an increase of Lm34 million, or 9.2 per cent, over the Lm368.7 million expended during the January to June period last year.

The increase in ordinary (or recurrent) revenue was mainly due to higher income of Lm7.5 million recorded under the licences, taxes and fines head of revenue, and was made up of receipts from oil rental fees and duty on documents, as well as receipts previously shown under the lotteries head of revenue.

At the same time, an increase of Lm5 million over the amount received last year has been recorded under fees of office, mainly through proceeds from the foreign investment scheme registration tax.

An increase of Lm2.2 million was also recorded under customs and excise duties, mainly through excise revenues from machine-made cigarettes and petroleum.

Income tax and consumption tax this year increased by Lm2.3 million and Lm0.7 million respectively, while revenue from social security contributions declined by Lm0.5 million, or 0.7 per cent.

Recurrent expenditure, excluding public debt servicing, in the first half of the year amounted to Lm315.6 million, an increase of Lm29.3 million, or 10.3 per cent, over the Lm286.3 million expended last year.

Total expenditure makes up 48 per cent of this year's budgetary estimates, up from 46.6 per cent of the actual final outturn for last year.

Personal emoluments to date this year amounted to Lm98 million, and made up 50 per cent of the budget (Lm197.64 million). Last year's outlay for this category amounted to Lm96.8 million. This also accounted for 49.7 per cent of the final outturn of Lm194.96 million.

So far as the operational and maintenance expenses for both periods are concerned, last year's outlay of Lm21.6 million accounted for 47.7 per cent of the final outturn, while this year's expenditure of Lm26.1 million accounts for 57.8 per cent of the budget figure.

This increase is due to (a) higher settlement of utility bills (Lm3 million this year against last year's Lm2.5 million), and (b) expenditure on the health division's medical and surgical materials (Lm8.7 million this year compared to Lm6 million during the same period last year).

The outlay in respect of special expenditure, at Lm0.26 million represented an increase of Lm0.02 over the expenditure last year (Lm0.24 million).

The expenditure incurred on the programmes and initiatives category last year amounted to Lm151.4 million and stood at 47.1 per cent of the final outturn (Lm321.6 million). This year's outlay of Lm158.7 million represents 46.5 per cent of this year' budget estimates.

The increase, in absolute terms, of Lm7.3 million this year mainly represents an increase in Treasury pension payments (+Lm0.9 million), social security benefits (+Lm3.0 million), and NPAA-related activities, mainly those undertaken by the Education Ministry. The latter element was last year implemented later on during the year.

The outlay on the contributions to government entities category this year amounted to Lm32.6 million, an increase of Lm16.3 million over the Lm16.2 million expended last year. This increase includes more than Lm13 million which during 2001 were accounted under capital expenditure as operational and debt servicing costs of entities like Malta Drydocks, Freeport and MGI/MIMCOL.

Furthermore, expenditure in respect of entities like the Malta Statistics Authority, and the roads and licensing and testing Directorates, which this year is accounted under this category, was last year featured in the form of a normal vote.

The interest portion of public debt-servicing costs has this year increased by Lm3.6 million or 12.4 per cent, and amounted to Lm32.9 million. This increase was mainly the result of loans borrowed during 2001 and more use of Treasury Bills this year than last year.

In a statement, the Labour spokesman for the economy Leo Brincat said that in the first six months of the year, the deficit had already reached the amount forecast for the whole year.

"In fact, while the government forecast a deficit of Lm77.7 million until December 2002, by the end of June it had reached Lm78.5 million," he said.

He said that government revenue at 3.4 per cent had grown much more slowly than its expenditure at 9.2 per cent.

Mr Brincat said the government would try to make the figures look better by showing part of the privatisation income as ordinary revenue, but this did not change the fact that the public financial situation was worrying.