COVID-19 starts to bite as government finances go under by €300 million

Government revenue decreases by €88.9 million, expenditure increases and consolidated fund deficit more than doubles, NSO figures for first three months show

Social distancing measures have included restrictions on the opening of some shops and the closure of all travel
Social distancing measures have included restrictions on the opening of some shops and the closure of all travel

The government deficit has more than doubled in the first three months as the country feels the pinch of the COVID-19 pandemic, figures out today show.

The deficit in government’s consolidated fund by the end of March stood at €312.5 million, the National Statistics Office said. During the same period last year, the country reported a deficit of €134.2 million.

An increase in expenditure, coupled with a reduction in revenue of €88.9 million, were the main drivers for the higher deficit.

“Decreases in revenue and increases in expenditure reflect developments related to COVID-19,” the NSO said.

With the onset of the pandemic on 7 March, government started introducing restrictions to limit the spread of the virus that included the closure of some shops and the complete shut down of sea and air travel. The restrictions have disrupted the economy as businesses saw their incomes drop dramatically and the tourism industry grinding to a complete halt.

COVID-19 has caused a global economic crisis and governments have had to step in with support measures to cushion the blow on companies and workers. The Maltese government has put forward a multi-faceted rescue package that will increase public spending and cause debt to rise.

Recurrent revenue totalled €925.6 million, a decline of almost 9% when compared to the first quarter of 2019. Lower receipts were reported for all tax revenue streams.

By the end of March, total expenditure amounted to €1.2 billion, an increase of almost 8% on the same quarter last year.

Recurrent expenditure increased by €42.2 million with the principle contributor to this being an increase of €28.2 million reported under contributions to government entities.

The NSO said the interest component of the public debt servicing costs totalled €45.7 million, €4 million lower than the same period in 2019.

Government’s capital spending amounted to €157.2 million, an increase of €51.2 million. COVID-19 business assistance amounted to €50 million.

By the end of March, central government debt stood at €5.5 billion, a €47.8 million increase.

NSO figures released on Tuesday showed that registered unemployment in March increased on the back of the economic crash brought about by the pandemic.

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