With reference to the article entitled Truth with bad intent (Alfred Mifsud, TMID 27 October), I would like to clarify some very important points raised that possibly may have led Mr Mifsud to believe that the government was presenting a number of half-truths which, when put together, imply that the government was telling truths with a bad intent. I beg to differ by answering the points raised.

Should grants be accounted for as “ordinary revenue”?

Apart from the fact that it is international practice, including IMF methodology, that grants are recorded in government accounts as “ordinary revenue”, one may add that, from 2007 onwards, such monies are also reflected, lira for lira, under expenditure for particular projects and initiatives financed from the EU. In addition, any local co-financing is also being featured under expenditure, thus impacting negatively on the net deficit position.

Should sale of land be accounted for as “ordinary revenue”?

It is important to note that the three per cent deficit to GDP Maastricht Treaty criteria does not exclude the possibility of generating revenue through the sale of land. However, in assessing the sustainability of public finances over the medium term objective, sale of land proceeds are not taken into account in assessing the government’s financial position. It is pertinent to point out that while last year the government depended on around Lm25 million from the sale of land, the budget for 2007 reaches the deficit target of 2.6 per cent of GDP with only Lm4 million from the sale of property which is, on average, the amount received by the government year-on-year.

Should the auction sale of government stock be accounted for as “ordinary revenue”?

Under ESA ’95 methodology, the government is today effecting the necessary adjustments and accounting for such proceeds received in cash in any particular year as premium accruable and receivable over several years. Clearly, the government is not taking proceeds from such sale as revenue on a cash basis.

Did the government pass to Enemalta the increase in fuel excise duties projected for 2007?

As explained at the same Table 13 of the 2007 budget speech, by Act VIII of 2006 (published on 30 June 2006), with effect from 1 April 2006, excise duties on petroleum products were adjusted to replace profits hitherto retained by Enemalta Corporation. In turn, the government is entering into an Electricity PSO agreement with the corporation. Thus, the petroleum excise duty increase from 2006 to 2007 is neutralised by a compensating figure under the government’s expenditure voted under the Resources and Infrastructure Ministry (Lm5 million) and the Family and Social Solidarity Ministry (Lm3.5 million).

Where have the contributions towards Malta Freeport Corporation’s debt servicing gone?

Up to 2006, the Lm6.05 million Malta Freeport interest payments were shown under the Contributions to Government Entities Category of Recurrent Vote 41, Investment, Industry and Information Technology Ministry. From 2007 onwards, as it should be, this amount, because of its very nature, is simply being recorded under the Programmes and Initiatives Category within the same Recurrent Vote 41, Investment, Industry and Information Technology Ministry. Note (c) on Page 227 of the 2007 Financial Estimates is stating this fact in clear terms. Surely, no difference whatsoever is thus experience or gained in money terms?

I hope that Mr Mifsud is now satisfied with the government’s financially stability and that there where no truths with a bad intent.

Tonio Fenech is Parliamentary Secretary, Finance Ministry