Lm4.6m rise in deficit in first nine months

The government's structural deficit in the first nine months this year reached Lm85.6 million, Lm4.6 million more than in the same period last year, figures released yesterday by the National Statistics Office show.

In the budget for this year, Finance Minister John Dalli had projected a deficit for the whole of this year of Lm77.7 million but in a consultation document for next year's budget, the latest document prepared by the finance ministry, the deficit for this year is estimated at Lm78.6 million.

Provisional statistics supplied by the Central Bank show that government debt outstanding at the end of September stood at Lm1,042.7 million, up by 3.9 per cent, over the figure for September last year.

Figures for the first nine months also show that revenue from VAT has declined marginally, by Lm100,000.

Labour finance spokesman Leo Brincat said the figures showed that notwithstanding an effort to play with figures, with regard to revenue from the privatisation of MIA, the deficit up to September was 10 per cent higher than that forecast for the whole year and six per cent higher than that for the same period last year.

Mr Brincat said that proceeds from the privatisation of MIA should not have been added to the government's 'ordinary revenue'.

"In reality, then the deficit increased to Lm106 million in the first three quarters of the year. This means that the deficit is 30 per cent higher than it was at this time last year and 36 per cent over government's targets for the whole year."

Mr Brincat said the drop in revenue from VAT indicated the decline in consumption in spite of government claims that private consumption had increased.

"Overall, the figures show that the government has lost control of public finances, and that its only hope was to perhaps add more proceeds from future privatisation to the ordinary revenue - a move which goes against the financial regulations of the European Union."

However, Mr Dalli insisted in a statement that Mr Brincat's statement was based on incomplete information.

"Just as there was revenue that was not usual, there were also payments made which were not usual and which will not be repeated," he said.

Mr Dalli said that all the capital expenditure had already been paid, rather than being spread out over the 12 months of the year. He said that revenue from income tax and national security contributions would be received in the last three months of the year, unlike last year when it was received in the first months of the year.

"It appears that Mr Brincat is not aware of this and is continuing to confuse and twist by reaching conclusions which will lead nowhere, except to try to contradict something that is well known: that the present government is succeeding where they failed."

Compared to the first nine months of last year, ordinary revenue this year rose by Lm38.7 million, to Lm505.6 million.

The NSO said that the partial privatisation of Malta International Airport had yielded Lm21 million in capital gains tax, duty on documents and dividends. At the same time, total expenditure amounted to Lm597.3 million, an increase of Lm42.7 million over the same period last year.

The rise in recurrent revenue was mainly due to an increase of Lm12.1 million collected in income tax and to a higher income of Lm12.6 million recorded under licences, taxes and fines.

An increase of Lm10.6 million was recorded in dividends on investments, mainly due to the partial privatisation of MIA. Revenue from fees of office added Lm6.1 million, mainly through proceeds from the foreign investment scheme registration tax.

The outlay on the contributions to government entities category in the first three quarters this year amounted to Lm47.2 million, an increase of Lm21.3 million over the Lm25.9 million expended during the same period last year.

This increase includes Lm18.9 million which, during 2001, were accounted for under capital expenditure as operational and debt servicing costs (of entities like Malta Drydocks, Malta Freeport Corporation and MGI/MIMCOL), or withdrawn from the Treasury Clearance Fund instead of from the Consolidated Fund.

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.

So far as the capital expenditure is concerned, the first nine months outlay exceeded that for the same period last year by Lm1.7 million, or 2.5 per cent and amounted to Lm71 million.

This comparative increase was due to higher expenditure related to sundry roads projects (+Lm3 million), on the new hospital project (+Lm4.3 million), and the Shipyards' early retirement schemes (Lm6.3 million).

On the other hand, this year's capital expenditure excludes Lm18.9 million representing outlays in respect of entities, which are being reported under recurrent expenditure.

Treasury Bills and Malta Government stock accounted for Lm192.4 million, or 18.4 per cent, and Lm813 million, or 78 per cent, respectively. The remaining share of Lm37.2 million or 3.6 per cent was made up of foreign borrowing.

At the end of September, government debt was Lm30 million higher when compared with the end of last year. Compared to one month earlier, government debt increased by Lm11.3 million.