Nationalists at government’s throat over rising national debt

Government hits back at former finance minister Tonio Fenech saying he presided over debt levels that breached the 70% of GDP threshold back in 2004 and 2005

Finance minister Edward Scicluna
Finance minister Edward Scicluna

 

The Opposition has insisted that national debt has never risen above the 70% of GDP threshold since 2010, contradicting claims by the government which is under pressure over the rising level of debt.

In a table of data published by the NSO on 21 October, debt registered in 2013 during Labour’s first year climbed to 69.8% from 67.9%, while data released by the government in its Budget speech shows a forecast of debt going over 70%.

“Government should tell the public how in the first six months of the year, debt increased by €518 million, at the rate of €3 million every day,” Nationalist MP Tonio Fenech said.

On its part, the government is saying that the NSO data being quoted today by the PN was reviewed under ESA 2010 standards, and that under his watch as finance minister, national debt had also been registered over 70% of GDP. “In his last year in government, Fenech presided over debt of 70% of GDP.”

The government added that debt was as high as 70.1% of GDP in 2005 and 72% in 2004.

Malta was back then not yet a member of the eurozone.

Debt goes up and down during the year

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.
Debt in the first six months of 2014 increased by €518 million, and now the PN is pointing out that debt increased by €370 million in 2013 alone – Labour’s first year in government. 

In 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.

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.

More in Budget 2015