Malta is writing history as figures show the country is chipping away at its debt

It has been custom for central government debt to register a year-on-year increase every month but for the first time in many years, 2018 has started on a different note.

Lost among the figures for government finances released every month by the National Statistics Office, was the news that Malta has started chipping away at its debt.

In the jargon used by economists, the central government debt is dropping in absolute terms. Debt has been dropping for the past four years in relative terms when compared to the country’s GDP. But the latest phenomenon is a more significant step.

In common parlance, if one were to compare the government’s debt to a house loan, the mortgage is becoming a lighter burden not only because the family’s income has increased but because the actual loan is decreasing.

Statistics out on Friday showed that last month saw the largest year-on-year decrease in central government debt with the NSO reporting a drop of 4.6% over February last year. This follows another decrease of 2% in January.

In February the central government debt stood at €5.4 billion, a drop of €261 million over the same month last year.

These positive figures started being registered in October last year when central government debt registered a year-on-year drop of 1.3%. The downward trajectory continued after that.

But what is significant about 2018 is that the year-on-year decreases started being registered from the first month, with February being somewhat of a phenomenon.

It does appear that for the first time in three decades, central government debt is consistently dropping in absolute terms not as a result of one-off income from privatisations but as a result of a surplus in public finances and Finance Minister Edward Scicluna is not surprised.

He attributed these results to the surplus in government finances registered last year and which according to NSO figures continued in the first two months of 2018.

“I was not surprised because the moment you stop registering annual deficits, you stop borrowing more and more. By registering a surplus, we are now cutting our debt,” Scicluna told MaltaToday.

Central government debt does not include debt incurred by local councils and government agencies and authorities.