Malta’s deficit and debt levels have continued to spiral out control in the first seven months of the year according to data published by the National Statistics Office today, with Government seeking to partly make amends by reducing investment on which the livelihood and quality of life of Maltese families depend, Nationalist Party spokesman for finance Tonio Fenech said today.

Data published by the NSO shows that deficit figures clearly indicate that Malta will be above the 3% mark by the end of the year with the deficit going up by €309 million, which is substantially higher than what should have been achieved at this point of the year. At this point the deficit last year was €51 million less. As a result, the Labour Government has now increased Malta’s debt by €400 million, that’s almost €1,000 per head!

This is a result of a drastic increase in Government expenditure – which, excluding the areas of social security and education, shows an increase of no less than €100 million. Worryingly, while Government is saving costs by cutting on democracy (removing elections) and support to investment (as happened with the non-continuation of a number of funds aimed at businesses), it had no difficulty spending close to €60 million more in salaries and operational expenditure.

In terms of private sector profitability, the latest NSO data on finance also confirms the evident difficulties afflicting the sector: although income tax revenues have increased in 2014 over 2013, this increase is over 50% lower when compared to the increase registered last year. Unfortunately for the job prospects of Maltese and Gozitan workers, Government has sought to recoup its excesses on salaries and cost of operations, by cutting off €18 million in productive investment.

This data point towards one simple conclusion – a Government which is clearly off-track in its financial goals. The PN urgently calls on Government to review its expenditure, particularly in terms of increased expenses in the public sector, and, not to resort to cutting off crucial expenditure items on which the livelihood and quality of life of Maltese families depend.

Government reaction

The Government’s finances are on track and are in line with the projections laid down in the 2014 budget.

This was confirmed by Central Government Finance figures (January to July 2014) published by the National Statistics Office on Friday 29th August 2014, which show that aside from outstanding payments due by Enemalta, both government revenue and expenditure are in line with the 2014 Budget projections.

Indeed, on the revenue side, Government finances are performing better than expected, increasing by as much as €38.8 million beyond what was forecasted.

The cash flow shortfall in excise duty due by Enemalta will be made up fully before the end of this year and accrued accordingly. There is therefore no effective increase in the central government deficit over last year.

Furthermore, both income tax and social security contributions recorded an increase when compared to projections. In fact, revenue from income tax increased by €24.6 million while revenue from social security contributions recorded an increase of €14.2 million.

This reflects the sustained generation of employment driven by a strong employment growth rate that is among the highest in the European Union. Revenue from other non-tax revenue sources were also broadly in line with projections.

On the expenditure side, the total expenditure for the period was marginally below what was projected for the 2014 budget. This positive performance on the expenditure side was mainly driven by lower-than projected expenditure on programmes and initiatives, operations and maintenance.

“The NSO’s figures continue to confirm that Government finances are in line with the budget estimates and Government is confident that we are on track with regards to reaching the deficit target for this year,” said the Minister for Finance Prof. Edward Scicluna.

It is highly ironic that the Opposition’s Shadow Minister for Finance, under whose watch the country entered into Excessive Deficit Procedure (EDP) twice in the space of a few years, and who left as his inheritance a public energy corporation on the brink of collapse, is now attempting to undermine the economic and fiscal successes this Government has managed to achieve.

The Opposition’s wilful misinterpretation of published figures, coupled with its refusal to even recognise its shambolic legacy, far less accept responsibility for it, confirms that the Opposition has not yet learned from its gross economic and fiscal mismanagement, and lacks all credibility on economic and fiscal issues.