Government revenue crashed by 17.4 per cent in the first five months of 2020 when compared to the same period last year, with steep drops in income tax, VAT and social security income. 

The dip in revenue was accompanied by a 15.2 per cent increase in government expenditure that month, as coronavirus restrictions introduced in March slowed down the economy while forcing the government to fork out millions in subsidies and financial aid.

Statistical data released on Friday by the National Statistics Office showed that the government consolidated fund reported a €673.4 million deficit in May.

That represents an increase of more than €600m in the government deficit over the 12-month period. At the end of May 2019, the deficit stood at €64.7m. The government would go on to end 2019 in surplus. 

In its statement, the NSO noted that the deficit increase “mirrors an increase in total expenditure, consisting of recurrent expenditure (€161.8 million), interest (-€2.7 million) and capital expenditure (€129.2 million), in addition to a drop in recurrent revenue (€317.7 million)”

As a result, government debt rose by almost €900m by the end of May when compared to last year.

Recurrent expenditure

Recurrent expenditure rose by €161.8 million to just under €1.8 billion during the first five months of the year, with a €111.2 million rise in Programmes and Initiatives the key driver. Those initiatives included added outlays for social security benefits, including €10m in COVID-19 social benefits, and just under €18m spent on medicines and surgical materials. 

Capital spending

Government’s capital spending almost doubled when compared to last year, rising by €129.2m to reach €310m. In large part, the significant increase was due to a €115m outlay to finance the government’s COVID-19 wage supplement.