Updated | ‘Election quarter’ debt bolstered by increase in government stocks

Updated with comment from shadow finance minister Tonio Fenech at 1:20pm

The Opposition is taking the Labour government to task over the increase in Malta’s national debt, but there could be more than meets the eye in the numbers.

On Dissett on Thursday evening, Simon Busuttil declared that debt in the first six months of 2014 had increased by €518 million, and now the PN are correctly pointing out that debt increased by €370 million in 2013 alone – Labour’s first year in government.

@SimonBusuttil: @JosephMuscat_JM's 1st record in Gov. #Debt increases 2 €370M - all time high since #Malta joined #EU pic.twitter.com/9fwJxi34XM

— Clyde PULI (@ClydePuli) November 7, 2014

Busuttil was quizzed over his statements by Dissett presenter Reno Bugeja, particulary because debt and deficit figures are usually presented in quarters, as National Statistics Office and Eurostat data shows.

In the data broken down by MaltaToday, the year of the ‘record increase’ in debt since Malta joined the EU did increase by €370 million, but this was the year in which Malta also registered the highest ever quarterly increase in debt: €300 million during the first quarter of 2013, the so called ‘election quarter’.

That means that in the first three months of 2013, after the Nationalist administration had failed to approve the Budget and had to constitutionally limit spending to 30% of what it had budgeted, national debt increased by €300 million.

The Nationalist administration was responsible for 64 days of those three months. But then under Labour, national debt increased by €123 million in the second quarter, by €112 million in the third quarter, and then actually decreased by €168 million. As the data shows, towards the end of the year, the increase in national debt actually slows down because the government is raking in more tax and VAT receipts.

To judge like with like, the ‘record’ debt year of 2013 includes the quarter with the highest ever quarterly increase in national debt; and the largest ever decrease in debt since 2009.

@edward_scicluna defends record with debt dynamics ... Official EU statistics debt 2012 67.9% 2013 69.8 2014 71% forecast. What dynamics?

— Tonio Fenech (@TonioFenech) November 7, 2014

In a comment to MaltaToday, Fenech said that the reason debt was higher in the first quarter of 2013 was that the government bought stocks from the public to finance the year ahead. "And that is why it [eventually] went down. There was no particular factor that led to that increase and, ultimately, you have to see the full yearly bill... The European Commission forecasts a 71% debt [for 2015] The trend is that debt is on the rise from 67.9% to 69.8% and now to a forecast of 71%"

The finance ministry has not reacted to Busuttil’s claims on Dissett, save for a tweet by minister Edward Scicluna. But the PN yesterday set much store in issuing a statement, under embargo and following the recording of Dissett, focussing on the €518 million increase in debt.