Central government finances register bigger deficit in first three months

Expenditure surpassed the €1 billion mark in the first three months of the year as central government finances registered a deficit of €134 million, figures out today show.

The deficit in the first quarter is more than double the deficit registered in the same period last year.

Expenditure increased by €161 million between January and March, outpacing an increase in revenue of €87 million and contributing to the higher deficit.

The figures were released by the National Statistics Office on Friday.

A deficit in the first three months is not a rare occurrence and is often prompted by government expenditure brought forward to the start of the year. On the other hand, government revenue trickles in over the course of the year.

The NSO said that the main contributors to expenditure in the first three months were an increase of €68.8 million under programmes and initiatives.

These included a higher spend on school transport, cancer treatment, church schools and landscaping.

Higher outlays were also registered in contributions to government entities (€21.4 million), wages in the public sector (€20.7 million) and operational and maintenance expenses (€9.6 million).

Explainer: Deficit to surplus to deficit

Recent statistics showed that central government finances ended in deficit last year but the country eventually registered a surplus when general government finances were taken into account.

General government finances also include income and expenditure by public agencies and State companies. The IIP fund, financed by money from the passport scheme, is also taken into account when general government finances are calculated.

Central government finances, also known as the consolidated fund, reflect the ordinary income and expenditure. In 2018 these ended in deficit, reversing the previous year’s surplus.

However, this was reversed when the full picture for 2018 emerged.

It is the general government finances that the European Commission considers when evaluating a country’s fiscal performance. Eurozone benchmarks for deficit and debt are based on general government finances.

Malta ended 2018 with a surplus of 2% and a debt-to-GDP ratio of 46%, which are much better that the EU benchmarks of 3% deficit and 60% debt.

Malta ended up with a surplus even if the IIP money is excluded from the equation.

Today’s statistics give a partial picture for the first three months of 2019 and only take into account central government finances.