In the first six months of 2016, government received €42 million more in revenue than was projected Finance Minister Edward Scicluna said today, while also noting that government expenditure was €13 million less than expected.
The minister was presenting the 2017 pre-budget document ‘Prosperity with Social Justice’.
Government revenue totals €1,657,056,000 in the first six months of 2016, however expenditure is still higher, with the amount standing at €1,767,684,000. Personal emoluments increased over 2015. In the first six months of 2015, government spent €341,193,000 on personal emoluments, while in 2016 this rose to €359,510,000.
"In 2015, the GDP-to-debt ratio declined to 63.8% of GDP. The decline of 3.2 percentage points (p.p.) of GDP is mainly attributable to the buoyant macroeconomic environment as reflected by the contribution of real GDP growth to the reduction in the debt ratio, complemented by the contribution of inflationary pressures and the impact of the primary balance," the document read. In 2016, this debt-to-GDP ratio is expected to decline further by 1.4 p.p. to 62.4% of GDP.
Government is aiming for a deficit target of 0.7% of GDP in 2016 which will decline to 0.6% of GDP in 2017, and further down to 0.2% of GDP by 2018.
Malta also continued to be one of the EU top economic performers in the EU, reaching a real economic growth of 6.4%, three times the EU average.
The Minister for Finance also highlighted the fact that the Government achieved its plan to enhance Malta’s output potential while consolidating public finances. "Studies are showing that the budget measures have contributed to the enhancement of growth in the labour market. In fact, thanks to the tapering of benefits, the in-work benefit scheme and free childcare facility, the country is experiencing historically low levels of unemployment, with 2,032 people returning to gainful employment. This resulted in an increase of 0.07 percentage point (p.p.) in the employment rate, a decline of 0.4 p.p. in the unemployment rate, an average increase of around 0.17 p.p. to Malta’s potential output growth and an increase of 0.63 percentage point in real economic growth in 2015 relative with 2013".
This is a budget for the second part of the legislature, Minister Scicluna said during the press conference. “The first part of this legislature was aimed at our economic plan for certain benefits to be created in order for government to have more room to manoeuvre financially”.
“The first aim through this budget is to continue consolidating government finances by reducing the deficit and ensure that economic growth is sustainable. The second aim is prosperity with social justice, by ensuring nobody is left on the edge, and that everyone benefits from a good standard of living, even those on a low income”.
He mentioned childcare services, and said that through the free childcare services an increase in women in the workplace was noted He also mentioned the tapering of benefits scheme, saying it also encouraged more unemployed persons to enter the workforce.
He mentioned the in-work benefit scheme.” Preliminary estimates show that the introduction of this scheme led to a 0.13 p.p. decline in the overall poverty rate, with much of the drop being attributed to households with dependent children”.
He said that government does not want a working poor, and that this in-work benefit helps supplement the minimum wage.
Early school leavers still a problem
The pre-budget document notes that despite ongoing improvement in the early school leaving rate, Malta reported a rate of 19.8% in 2015, when the EU 2020 agenda has set the objective of reducing early school leaving to 10%, an objective endorsed by Malta in its National Reform Programme. ”Government is committed to continue to implement policies which increase the pace of convergence in education standards”.
Turning to the law courts, the document reads that government is in the process of introducing new legislation in order to speed up proceedings with respect to resolution of insolvency, through the new concept of Second Chance which seeks to introduce voluntary mediation procedures in insolvency if at least 60% of the company’s creditors are in agreement. “It is also placing due importance in bolstering alternative dispute resolution mechanisms through its commitment in expanding the mediation centre”.
The document also mentions social inclusions, and problems faced by those on a lower income. One such problem lies with rising rents. As such, government is currently reviewing the Rent Subsidy Scheme, as well as other studies to make more affordable housing available.
The document states that next year, substantial progress will be made on the demolition of the Marsa power station and the Delimara chimney.
Government is introducing CCTV cameras and Automatic Number Plate Recognition cameras across critical road sections this year.
A feasibility study on a Malta-Gozo link is currently being carried out with the aim of better understanding the geological challenges of building a tunnel between the two islands.