The National Statistics Office published the data on public finance for the first half of this year. Unfortunately the indications one gets from the data are not so definitive such that one is left wondering at the usual dilemma as to whether the glass is half empty or half full. There is some positive news but there is also some not so positive news.

When one also considers that there have been times in the past when positive trends did not get consolidated in the medium- and long-term, one may feel that it is still too early to draw any conclusions. This explains the question posed in the title of this week's contribution.

It is not a definite statement but there are certain aspects of the data that, if confirmed in the coming months, could prove themselves as an indication that the issue of the public sector deficit is being addressed successfully.

Admittedly, although I make reference to the "cure" and whether it is working, it is still unclear what the medicine is. We have only had just one taste of it - and that was after June - in the form of the eco-tax (and even in this case the implementation has been postponed).

So the positive trends that emerge from the first six months of this year are a result of administrative measures and measures announced in the last budget rather than specific initiatives taken this year. Moreover, it is worth remembering that this six-month period was shared roughly equally by two different Ministers of Finance; so any positive trend cannot be attributed to any one person.

The data shows a narrowing of the deficit from Lm114 million for the first six months of last year to Lm97 for the first six months of last year. However, this is still significantly higher than that for the first six months of 2002 and 2001.

The shortfall between recurrent revenue and recurrent expenditure was of Lm14 million compared to the Lm23 million of last year.

In 2002 and 2001, recurrent revenue was actually larger than recurrent expenditure.

The narrowing of the deficit is purely due to an increase in revenue (even though it is still 39.8 per cent of total budget revenue), as total expenditure remained at the same level as last year. Recurrent revenue for the first six months of last year had remained static when compared to the corresponding period the previous year, while this year it registered a significant increase.

In broad terms, recurrent expenditure was 47.25 per cent of the budget forecast, capital expenditure stood at 38.28 per cent of the budget forecast while total expenditure (that also includes public debt servicing) stood at 46.2 per cent of the budget forecast.

Given this result, one expects from the public service that the performance is maintained, if not improved upon, in the second six months. One expects that no director, permanent secretary or minister goes on a spending spree in November and December just because expenditure has not reached the budget forecast.

In fact, if all budget revenue is collected and expenditure is maintained at the level of the first six months, the deficit would be brought down to Lm36 million from the Lm118 registered for the whole of last year. That would really mean that the cure is working!

This may be a very challenging target but one thinks it can be possible. For example, there are certain items that are variable by nature and have a strict relationship with time. One of them is personal emoluments. Wages and salaries are paid every month and unless there is new recruitment in the second six months of the year, the amount paid under this item of expenditure should remain fairly static.

It is important to single out this item as it represents 26.6 per cent of total recurrent expenditure and during the first six months of this year there was a reduction of Lm6 million compared to the first six months of last year.

We can apply the same type of reasoning to operational expenditure and social security benefits. Operational expenditure should be strictly tied to the level of activity of the different government departments. If anything this activity is higher in the first six months of the year than in the second six months, what with half days in summer and the Christmas period in the last two weeks of the year.

Again there should be a strict control mechanism that ensures that no one simply goes spending the money because it has been budgeted for.

In fact, the worst thing that one can do is to go on an economy drive. It is not enough to measure expenditure. It is equally important to measure outcomes and results. An economy drive just produces inertia and laziness. If the economy drive is coupled with a drive to maximise output, then the cure would really start to have effect. It would ensure that we have a more cost-effective public administration, where the search to do more with less is constant.