The shortfall (structural deficit) between recurrent revenue and total expenditure amounted to Lm112.8 million, compared to a shortfall of Lm126.2 million reported for January-August 2003. Govern-ment’s expenditure for the first eight months of the year accounted for 62 per cent of this year’s budgeted expenditure. The expenditure for the comparative period last year accounted for 67.2 per cent of the actual total expenditure for 2003.
During the period under review, proceeds from the Sinking Fund on Converted Loans amounted to Lm8.9 million, while during the same period last year these proceeds amounted to Lm2.1 million. Between January and August 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 were made during the first eight months of 2003, while no such repayments have yet been effected this year. During the first eight months of 2004, the amount of Lm70.6 million in local loans was raised, while no new foreign loans were contracted. The corresponding amounts for 2003 were Lm69.9 million and Lm32.2 million respectively.
Recurrent revenue during the first eight months of 2004 increased by Lm27.4 million, or 6.2 per cent, when compared to the same period last year. This increase was mainly due to higher revenues under Income Tax (+Lm9.6 million), VAT (+Lm7 million), Dividends on Investment (+Lm1), and EU Grants (Lm10.9 million).
A net increase of Lm10.7 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. Meanwhile, revenue reductions were reported under Social Security (-Lm2.3 million), Central Bank of Malta (-Lm6.5 million), Rents (-Lm1.7 million), as well as under Customs and Excise Duties (-Lm2.2 million).
When compared to the same period in 2003, recurrent expenditure (excluding Public Debt Servicing) increased by Lm18.1 million or four per cent, and amounted to Lm464.3 million. Recurrent expenditure for the periods under review make up 62.8 per cent of this year’s budgetary estimates and 65.8 per cent of the final outturn for 2003.
Personal emoluments to date amounted to Lm123.7 million, and made up 62 per cent of this year’s budget forecast (Lm199.6 million), while last year’s outlay of Lm129.5 million made up 66.1 per cent of the final outturn. These figures represent a comparative decrease this year of Lm5.8 million, part of which is due to the personal emoluments element of the Drainage Directorate which is appearing under a different expenditure category in 2004. At the same time this year’s outlay includes increases resulting from the annual increments and the latest Civil Service collective agreement.
Expenditure under the Operational and Maintenance Expenditure category amounted to Lm35.3 million during the first eight months of 2004 as compared to Lm34.2 million for the comparative period last year. This total represents an increase of Lm1 million or three per cent. At the same time, expenditure registered under the Special Expenditure category amounted to Lm0.43 million, compared to Lm0.36 million expended last year.
Expenditure incurred under the Programmes and Initiatives category this year amounted to Lm252.7 million and stands at 61.2 per cent of the budget estimates (Lm413.1 million). Last year’s outlay under this category amounted to Lm232 million, and represented 64.5 per cent of the final outturn. The net increase of Lm20.7 million was mainly due to higher outflows in Social Security Benefits (+Lm7.6 million), Compensation Payment by Government as announced in the 2004 Budget Speech (Lm7 million), EU Own Resources Contribution (Lm6.9 million), Solid Waste Management Strategy (+Lm2.2 million), Interest on the ex-MDD/MSCL Loans (Lm1.4 million, appearing under a different category in 2003). On the other hand, lower expenditure was reported under Electoral Commission Activities (-Lm1.1 million), Social Security State Contribution (-Lm1.2 million), and the EU NPAA/Pre-Accession Programmes (-Lm3.1 million).
The outlay under the Contribution to Government Entities category during the first eight months of this year increased by Lm2.1 million, or 4.1 per cent, and amounted to Lm52.1 million, up from last year’s figure of Lm50.1 million. An amount of Lm3.5 million was reported under the Drainage Directorate, while the comparative expenditure in 2003 was included under different expenditure categories.
Other reasons for the comparative increase reported under this category were the funds passed to Industrial Projects and Services Ltd (Lm2 million), MCAST (+Lm0.8 million) and the Water Services Corporation (+Lm0.7 million). On the other hand, lower expenditure was registered under the Malta Shipyards item (-Lm5.4 million) which, in 2003, partly featured also under capital expenditure.
The interest component of the public debt servicing costs increased by Lm5.1 million, from Lm42.7 million last year to Lm47.8 million in 2004. This resulted from interest payments due both on local stocks (+Lm4.4 million), as well as foreign loans (+Lm1.4 million).
During the first eight months of this year, capital expenditure declined by Lm9.2 million, or
11.7 per cent, and amounted to Lm69.7 million. This net decrease was the result of lower expendi-ture under the capital votes covering the Ministries of Education
(-Lm1.2 million), Finance (-Lm1.8 million), Transport and Communications (-Lm4.5
million), Health (-Lm5.2 million) and Information Technology and Investment (-Lm5.6 million). Increases were registered under Foreign Affairs (+Lm6.2 million) and Rural Affairs and the Environment (+Lm1.4 million).
Provisional statistics provided by the Central Bank of Malta indicate that Central Government debt outstanding at the end of August was of Lm1,351.1 million. This amount represents an increase of Lm150 million, or 12.5 per cent, from Lm1,201.1 million outstanding at the end of August last year. This year’s total includes Lm41.8 million which is the Government’s assumption of the debts of the ex-Malta Drydocks and of the ex-Malta Shipbuilding. For the sake of consolidation, as from this year the Sinking Fund investments in Government debt (Lm1.9 million) are being deducted from the total outstanding balance.