Data from the government Consolidated Fund for May 2007 show that the shortfall between recurrent revenue and total expenditure for the first five months of 2007 amounted to Lm66.6 million.

This is Lm3.1million higher than the shortfall of Lm63.4 million recorded for the same period in 2006, and was the result of an increase of Lm14.4 million in total expenditure, which was in part offset by a corresponding increase in recurrent revenue.

During the first five months of the year, revenue from income tax increased by Lm12.3 million. At the same time, revenue from social security contributions added Lm6.4 million, while the amount of Value Added Tax paid increased by Lm1.7

million.

On the other hand, revenue from grants was down from Lm20.4 million last year to Lm2.6 million for the period under review.

Recurrent expenditure amounted to Lm328.7 million, an increase of Lm15.2 million compared to the first five months of 2006. This increase was mainly brought about by an increase of Lm5.7 million in social security benefits, as well as by higher outlays (+Lm3.9 million) on medicines and surgical material by the Ministry of Health.

At Lm34.7 million, the interest component of the public debt servicing costs for the January to May period had fallen by Lm0.5 million. This decline was the result of lower interest payments on the government’s long-term borrowing.

Capital Expenditure in the first five months of the year amounted to Lm37.1 million, registering a marginal reduction of Lm0.3 million when compared to expenditure of Lm37.4 million in the same period in 2006. Lower capital outlay by the Finance Ministry (-Lm1.9 million), the Tourism and Culture Ministry (-Lm1.4 million) and the Urban Development and Roads Ministry (-Lm1.1 million), were in part offset by higher expenditure on the part of the Rural Affairs and the Environment Ministry (+Lm1.8 million) and by the Gozo Ministry (+Lm0.8 million).

New loans taken up by government for the first five months of the year amounted to Lm16.3 million.

The Central Government debt outstanding at the end of May 2007 amounted to Lm1,395.3 million, a reduction of Lm9

million compared to the debt position at the end of May 2006. This fall was brought about by a reduction of Lm7.2 million in Government Stocks, as well as a reduction of Lm10.1

million in foreign borrowing.

Short-term borrowing (Treasury Bills) stood at Lm175.9, an increase of Lm8.8 million.