On 28 September, Malta submitted its report on government deficit and debt levels for the years 2003-2007. This was Malta’s second submission for 2007 and updated the first submission of 30 March, the National Statistics Office reported yesterday.

Debt and Deficit Positions

In 2006, general government net borrowing (or deficit) was estimated at Lm54.7 million, down from a deficit of Lm62.7 million for 2005. The general government deficit was equivalent to 2.5 per cent of GDP compared to 3.1 per cent of GDP for the preceding year.

At the end of 2006, the general government nominal gross consolidated debt amounted to Lm1,396.3 million, or 64.7 per cent of GDP, compared to Lm1,440.5 million, or 70.8 per cent of GDP for 2005.

Updates

Compared to the previous submission of 30 March, the following updates were made:

A. 2005

i. The deficit of the general government was increased by Lm1 million mainly on account of a corresponding decline in the surplus of the Extra-Budgetary Units (EBU’s). The surplus of the EBUs for 2005 is now estimated at Lm7.7 million;

ii. No statistically significant revisions were made to the general government nominal gross consolidated debt.

B. 2006

i. The deficit of the general government was increased by Lm1.2 million. While the deficit of the budgetary central government remained essentially unchanged, the estimated deficit of the EBUs went up by Lm0.5 million, while the outturn of the local councils was revised downwards from an estimated surplus of Lm0.5 million to an estimated deficit of Lm0.2 million;

ii. The estimated general government nominal gross consolidated debt was revised upwards by Lm1.1 million. Although no revisions were made to the central government debt, updated source data has necessitated the upward revision of the debt of local councils and of EBUs, by Lm0.3 million and by Lm0.8 million respectively.

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In another statement, the NSO said that the deficit recorded by the general government for the second quarter of 2007 amounted to Lm16.9 million, compared to a deficit of Lm10.0 million for the second quarter of 2006.

During the April-June period this year, total revenue amounted to Lm217.9 million, an increase of Lm1.4 million compared to the same period last year. Revenue classified as ‘current taxes on income and wealth’ increased by Lm11.3 million, while ‘transfers receivables’ declined by Lm13.4 million (on account of less grants received).

Concurrently, total expenditure, amounting to Lm234.8 million, registered a comparative increase of Lm8.3 million. While ‘intermediate consumption’ and ‘social benefits’ went up by Lm5.9 million and Lm4.1 million respectively, ‘interest payable’ declined by Lm5.4 million.

When analysed on a six-month basis (January-June), the deficit for the first half of 2007 increased by Lm15.5 million, and amounted to Lm63.4 million. A rise in total expenditure amounting to Lm18.7 million was only partly offset by a corresponding increase of Lm3.2 million in revenue.

When compared to June 2006, total general government debt outstanding at the end of June 2007 increased by Lm73.4 million, and amounted to Lm1,465.5 million. This increase was underpinned by higher short-term borrowing (essentially Treasury Bills). At end June 2007, Malta Government Stocks (classified as long-term securities other than shares) accounted for Lm1,158.2 million, or 79.0 per cent of the total outstanding debt.