Malta ended 2020 with a deficit of more than €1.4 billion after a year of increased government spending and a drop in revenue.

The National Statistics Office reported the impact on the public purse in the year that a global pandemic saw tourism come to a virtual standstill and the government subsidise wages as shops, restaurants and other services shut down.

Revenue dropped by 11.7 per cent from the previous year to €4.3 billion as income tax, VAT and other revenue streams decreased. 

On the other hand, expenditure was up by 18 per cent to €5.8 billion in 2020, of which recurrent spending was €4.6 billion, an increase of €422m.

The main contributor to the increase in spend was a €276 million rise in spend on programmes and initiatives. This included:

• extra spend on social security benefits (€79 million, of which €14.5 million were spent on COVID-19 social benefits);
• medicines and surgical materials (€49.2 million);
• the economic regeneration voucher scheme (€45.3 million);
• housing programmes (€15.8 million);
• feed-in-tariff (€15 million);
• extension of the school transport network (€9.8 million);
• cancer treatment (€8 million), St Vincent de Paul Residence service contract (€7.8 million);
• church schools (€7.5 million);
• waiting lists for medical services (€7.1 million);
• detention service, public service obligation for public transport (both €6.9 million);
• compensation payments (€5.7 million);
• additional street sweeping services and chief medical officer medicines (both €5 million).

Increases were also witnessed under contributions to government entities (€88.9 million), operational and maintenance expenses (€38.4 million) and personal emoluments (€19 million).

By the end of December, government’s capital spending amounted to €1,037.1 million, €482.1 million more than in 2019, largely due to additional spending towards investment incentives (€406.7 million).

The NSO said the government’s consolidated fund had, by the end of 2020, reported a deficit of €1,467.9 million, compared with a surplus of €9.4 million of 2019.

In response, the opposition called for clarity in government expenditure, saying this was crucial at a time when the public is constantly hearing of cases of corruption, direct orders and other dubious contracts given to ministers friends.

PN finance spokesman Mario de Marco said that, in the current circumstances, the opposition supported all additional expenses to save lives and jobs and to stimulate the economy by encouraging consumption and investment.

However, the government should be clear in its information about where the additional millions spent in 2020 had gone.

In his statement, de Marco said the opposition wanted to highlight the fact that an unprecedented increase in the government’s recurrent expenditure prior to the pandemic had limited the investment the government could undertake to strengthen the economy in preparation for its regeneration in the coming months.

Prudence and financial sustainability would be fundamental to put the country back on the road towards economic growth and job creation in the coming months, he said.