Government has pooh-poohed calls made for presenting a mini-budget to take new measures to address the economic downturn. My opinion is that rather a mini-budget government should present to parliament a fresh budget for 2009 based on current realities even if it does not consider it necessary to take any new measures.

The budget for 2009 presented last November is dead in the water and the projected deficit of ninety eight million euro for 2009 is totally unrealistic.

Let me make my case with the aid of some basic figures.

Table 1 compares the actual outturn of the fiscal deficit for 2008 to the result projected by the Minister of Finance when he presented the Budget for 2009 in parliament on 3 November 2009.

The deficit projected at two hundred million euro on budget day finished 16 per cent higher. This however is not the real story. The real story is that there is a shortfall of e82 million in revenue and the bottom line difference was not impacted much harder by this revenue shortfall only because payments for capital expenditure were postponed and probably shifted to the current fiscal year.

In normal circumstances this variance in such a short period of time would be unacceptable and would force one to question the technical competence of the minister running our public finance. However these are not normal circumstances. The minister presented the budget in the middle of an international economic freefall and visibility about actual revenue from taxes suddenly disappeared. This is not to say that they Minister was not unduly optimistic when presenting his budget, but no one really could preview accurately how the economic problems would compound into a crisis compromising the basis of government revenues throughout the world.

Table 2 shows the outturn of public finance for the first quarter January to March for the years 2007 -2009.

Notice that the deficit for the quarter has this year more than doubled from where it was two years back.

Notice also that that for the government to hit the e98 million deficit projected last November for the whole of 2009 it would have to generate a fiscal surplus of e167 million in the nine months April to December 2009. This would be impossible even in normal circumstances, so much so that the performance April to December 2008 was negative 23 million and 2007 was positive 21 million. Hitting a positive 167 million in the nine months April – December 2009 when the economic slowdown is brutally impacting government revenues is as likely as Christmas next July.

Government cannot continue to operate our finances using a totally irrelevant benchmark. Given current realities the final deficit is likely to finish between double or treble the level projected in the Budget for 2009.

It is time to look reality straight in the eye and present a totally new budget after making a line by line review of discretionary expenditure to see what economies could be driven to cushion the impact of the international recession of public finance.

www.alfredmifsud.com