Deficit down by €230 million in the past two years

Finance Ministry credits deficit reduction to the 'dynamism' that the government has injected into the economy. 

National statistics show that the deficit of the government’s consolidated fund has decreased by €230 million in the past two years.

In 2014, Government’s Consolidated Fund registered a deficit of €136.3 million. During January-December 2014, recurrent revenue registered an increase of €395.1 million, which outweighed the increase in expenditure of €268.2 million, resulting in a positive change in the Government’s Consolidated Fund of €126.9 million. During the period under review, recurrent revenue was recorded at €3,387.2 million, up from €2,992.1 million recorded in 2013.

The major contributors to the comparative increase of 13.2% were higher proceeds from Customs and Excise Duties (€124.2 million), Income Tax (€100.4 million), Social Security (€53.9 million) and Value Added Tax (€52.5 million).

Compared to 2013, higher spending was registered on recurrent and capital expenditures and interest payments resulting in an increase in total expenditure of €268.2 million. Recurrent expenditure went up by €224.4 million, totalling €2,857.1 million. The main contributor to this increase was higher spending on Programmes and Initiatives by €130.5 million. The major increases registered in the Programmes and Initiatives category were recorded in social security benefits (€38.5 million), the social security state contribution, which also feature as revenue (€17.8 million), medicines and surgical materials (€10.4 million), the contribution towards church schools (€5.6 million) and child care for all (€5.3 million), among others. Moreover, increases were also registered in Personal Emoluments (€50.3 million), Contributions to Government Entities (€32.5 million) and Operational and Maintenance Expenses (€11.1 million).

The interest component of the public debt servicing costs for 2014 increased to €231.1 million from €227.9 million the previous year. In addition, Government’s Capital Expenditure for 2014 stood at €435.3 million, from €394.7 million in 2013. The increase of €40.6 million was mainly brought about by added outlays on EU funded capital projects mainly road works, the procurement of a helicopter and the integrated flood relief project. Conversely, a lower equity injection to the national air carrier was registered.

At the end of December 2014, Central Government Debt stood at €5,129.6 million, up by €149.6 million, over 2013. This was the result of higher Malta Government Stocks, which increased by €288.7 million. On the other hand, Treasury Bills and Foreign Loans went down by €107.7 million and €10.6 million respectively.

As a result of consolidation, higher holdings by government funds in Malta Government Stocks resulted in a reduction in debt of €25.9 million. The Euro coins issued in the name of the Treasury went up by €5.1 million when compared to the coin stock as at the end of December 2013, and totalled €60.4 million.

“The deficit has narrowed because the government has injected a sense of dynamism into the economy, contributing to a record level of optimism in the country,” the Finance Ministry said in a statement. “Thanks to this government’s projects, jobs have increased at a higher rate than they had in the final five years under the previous administration, and unemployment is at a historic low. This has resulted in an increase in government income that has made good for the heavy increase in public investment.”