Malta’s national deficit stood at just over €1.1 billion by the end of September, as spending on COVID-19 measures coupled with drastically-reduced revenues caused by the economic slow down kept the government on track for its worst financial performance in years. 

Figures released by the National Statistics Office on Friday shed light on the government’s financial health, providing a breakdown of government income and expenditure as well as national debt. 

Debt

Malta’s national debt stood at just over €6.6 billion by the end of September, a rise of more than €1.3 billion from the previous year. The vast majority of that increase came through government stocks (€793.8 million) and treasury bills (€478.2 million) issued this year. 

By the end of that month, the country had spent €138.7 million servicing that debt - €8.4 million less than it had spent on debt servicing 12 months prior.

Revenue 

Government revenues were down 17.8 per cent by the end of September when compared to the same month in 2019, NSO figures show, and stood at €2.9 billion. In September 2019, revenue stood at more than €3.5 billion. 

The biggest falls were in income tax revenue, which was down just over €225 million and revenue from VAT, which fell by €152.7 million. 

Revenue declined in many other categories, too. Income was down in grants (€84.7 million), social security (€75.6 million), licences, taxes and fines (€71.3 million), customs and excise duties (€57.1 million), reimbursements (€9.8 million), rents (€8.1 million) and dividends on investment (€2.8 million).

Income was up in just two categories: miscellaneous receipts (€30 million) and fees of office (€24.4 million).

Expenditure

The government had spent €4 billion by the end of September, up 15.4 per cent when compared to the previous year.  

Most of that spending - €3.3 billion - was recurrent expenditure, with capital spending amounting to €610 million. 

Spending rose when compared to 2019 in both those categories. 

Recurrent expenditure rose by €295.4 million year-on-year, with just under €160 million of that increase coming through increased spending on programmes and initiatives such as additional social security benefits, which cost the government an added €63.5 million by the end of September, including a €14.5 million outlay on COVID-19 related benefits. 

The government also spent €50 million more on medicines and materials than compared to the January-September 2019 period, with an additional €45.3 million outlay to cover the cost of government vouchers given to help boost the local economy. 

Spending was also up on outlay for Church schools (€8.7 million), the feed-in-tariff (€8.1 million), a public service obligation for public transport (€7.8 million), housing programmes (€7 million), extending the school transport network (€5.4 million) and waiting lists for medical services (€5.1 million).

Spending was also bumped up by increases in contributions to government entities, which increased by €79.4 million, operational and maintenance expenses (€39.2 million) and personal emoluments (€17 million).

Capital spending totalled €610.4 million by the end of September - €256.5 million higher than 2019. 

Almost all that increase - €237 million – was spent on the COVID-19 business assistance programme.

Property, plant and equipment spending also rose by €45.6 million. On the other hand, there were drops reported under contribution towards the treasury clearance fund (€19.9 million) and in projects financed by EU Cohesion
funds 2014 -2020 (€17.6 million).

The Central Bank of Malta. Photo: Matthew Mirabelli

Deficit and debt 

As a result of declining revenues and rising expenditures, the deficit in the government’s consolidated fund by the end of September stood at €1,139 million, increasing by roughly €52.8 million over August. 

By contrast, in September 2019 the government’s books were in surplus by €37.9 million. 

The government has said that it expects to end 2020 with a shortfall of €1.22 billion between its income and expenditure – a 9.4% deficit that would also mark the first year in five that public accounts end the year in the red.