Recurrent revenue during the first half of this year amounted to Lm335.9 million, and made up 39.8 per cent of this year’s budget forecast. Compared to the same period last year, recurrent revenue increased by Lm16.9 million, or 5.3 per cent.

The shortfall (structural deficit) between recurrent revenue and total expenditure amounted to Lm97.4 million, compared to a shortfall of Lm113.7 million reported for January – June 2003. Government expenditure for the first six months of 2004 made up 46.2 per cent of this year’s budgeted expenditure. Expenditure for the comparative period last year made up 51.2 per cent of the actual total expenditure for 2003.

During the period under review, proceeds from the sinking fund on converted loans amounted to Lm2.9 million, while during the same period last year these proceeds amounted to Lm0.7 million. Between January and June 2004, contributions to the sinking fund amounted to Lm6.3 million, compared to Lm5.7 million for the comparative period in 2003. A total of Lm0.5 million in direct loan repayments was made during the first half of 2003, while no such repayments have yet been effected this year.

Proceeds from local loans this year amounted to Lm46.3 million. No foreign loans have been taken up to date this year. During the same period last year, Lm26.9 million in local loans and Lm32.2 million in foreign loans were contracted.

The comparative increase of Lm16.9 million in recurrent revenue was mainly the result of higher revenue under income tax (+Lm5.2 million) and VAT (+Lm7.7 million). A net increase of Lm9 million was also registered under licences, taxes and fines, mostly by way of signing-on fees received upon privatising the operations of the lotteries earlier this year.

These increases were partially offset by a revenue reduction from the Central Bank of Malta

(-Lm6.5 million), and from Customs and Excise Duties

(-Lm2.4 million).

Compared to the first five months of 2003, recurrent expenditure (excluding public debt servicing) increased by Lm7.3 million or 2.1 per cent, and amounted to Lm349.3 million.

Recurrent expenditure this year makes up 47.2 per cent of this year’s budgetary estimates, while recurrent expenditure for the same period last year made up 50.5 per cent of the year’s final out-turn.

Personal emoluments to date amounted to Lm93 million and made up 46.6 per cent of the budget forecast (Lm199.6 million), while last year’s outlay of Lm98.5 million made up 50.2 per cent of the 2003 final out-turn.

These figures represent a relative decrease this year of Lm5.5 million. This is in part due to the personal emoluments of the Drainage Directorate which this year is appearing under a different expenditure category. At the same time this year’s outlay includes increases resulting from the annual increments and the latest civil service collective agreement.

Total expenditure excludes government’s contribution to the Sinking Fund and direct repayments of loans.

This definition is in line with the ESA95 manual on deficit and debt.