Deficit hits €1 billion mark as COVID-19 causes havoc in public finances

A sharp drop in revenue and an increase in expenditure have pushed the deficit beyond the €1 billion mark, figures out today show.

Between January and July government revenue dropped by 20% to reach €2.1 billion, while expenditure shot up to €3.1 billion, a 14% increase, the National Statistics Office reported.

Income and expenditure were heavily influenced by the impact of the coronavirus pandemic that stifled the economy and forced government to make an extraordinary expenditure to buoy businesses and families.

The NSO said income tax receipts dropped by €207 million, the largest decrease, while VAT decreased by €115 million. All other income streams also exhibited declines.

On the expenditure side, recurrent spending increased by €200 million and capital expenditure rose by €196 million.

A breakdown of expenditure shows how the government spent €14.5 million on COVID-19 social benefits, €209 million on wage supplements to support industries hit hard by the pandemic.

The deficit surpassed €1 billion, a staggering increase of €926 million when compared to the deficit of €126 million during the same period last year.

The NSO said that by the end of July, central government debt stood at €6.6 billion, an increase of €1.1 billion over the previous year.