• The structural deficit has been cut from Lm104.6 million as at 31 May 2003 to Lm85.8 million at the end of last May, a decrease of almost Lm20 million.

• Government revenue increased by Lm21.6 million while total expenditure increased by only Lm2.3 million.

• Government received Lm6.4 million more from Income Tax and Lm10 million more from VAT.

• Although recurrent expenditure increased by Lm11.4 million, capital expenditure decreased by Lm12.2 million with Lm5 million less being spent on health, Lm3 million less on transport and communications and Lm2.5 million lesson IT.

• Central government debt however rose by Lm161.7 million from Lm1,175.9 to Lm1,337.6 million at the end of May.

Replying to questions by The Malta Independent on Sunday, Prime Minister Lawrence Gonzi said: “During the past months, the government has been making a concerted and consistent effort to address the budgetary deficit. Indeed, on assuming my premiership, I made it very clear that this was a priority item on my government's agenda. The strategy focuses on maximising revenue flows, controlling expenditure and addressing in a decisive manner all those government entities that have been consistently loss makers or were in danger of becoming major loss makers.

“This meant that we had to embark on an exercise that seeks higher levels of cost-efficiencies in all agencies including those that are doing well; reviewing spending across the board and re-aligning budgets according to spending forecasts, ensuring that proper project and financial management of capital projects is in place, evaluating current business practices and introducing smarter and leaner ones, etc.

“We are still at the very initial phase of this exercise, and the coming months will see an intensification of these initiatives which I will personally spearhead.

“At this early stage, I can state that I am optimistic because our first efforts are giving us concrete results. We have certainly paid a price by way of popularity, but the results are starting to become evident for all to see.

“I am convinced that the long term benefits will start to be reaped if we remain as determined as we are today.”

The major challenge, however, is to convince everyone that the short- term pain is necessary for us to gain in the long-term. This is a project that needs to be embraced by everyone, including the social partners and civil society because restoring the State's finances will provide benefits for all. Of course, this is only one side of the coin. The other side is to identify those measures that are required for us to stimulate economic growth. This is the second area we will be focusing on in the coming weeks.

“There is no room for complacency. While, as the government, we cannot hold back from investing in key areas which stimulate the economy, we need to curb expenditure. Experience shows that if every government department and entity drives an internal programme of cost-control through business process re-engineering, then we will surely redress the current financial imbalance while improving on the level of service than what we are providing today.”