Government deficit at €1 billion at end October

Government deficit at €1 billion at end October – NSO

Friday, 26 November 2021, 11:10 Last update: about 3 years ago

By the end of October 2021, the Government’s Consolidated Fund reported a deficit of €1,064.9 million, the NSO said today.

In the first ten months of 2021, Recurrent Revenue amounted to €4,017.5 million, 21.1 per cent higher than the €3,318.3 million reported a year earlier. The largest increase was recorded under Income Tax (€334.2 million), followed by Value Added Tax (€182.4 million), Social Security (€138.8 million), Grants (€32.6 million), Customs and Excise Duties (€26.2 million), Dividends on Investments (€18.8 million) and Licences, Taxes and Fines (€12.3 million).

The rise in revenue was partially offset by decreases under Miscellaneous Receipts (€32.3 million), Fees of Office (€5.8 million), Rents (€5.4 million) and Reimbursements (€2.4 million). By the end of October 2021, total expenditure stood at €5,082.5 million, 11.4 per cent higher than the previous year. During the reference period, Recurrent Expenditure totalled €4,424.3 million, a rise of €730.0 million in comparison to the €3,694.4 million reported by the end of October 2020. The main contributor to this increase was a €603.8 million rise reported under Programmes and Initiatives. Furthermore, increases were also witnessed under Personal Emoluments (€91.2 million), Contributions to Government Entities (€30.4 million) and Operational and Maintenance Expenses (€4.5 million). The largest development in the Programmes and Initiatives category was related to the Pandemic assistance scheme (€300.4 million), which includes the COVID-19 Business Assistance Programme.

Other increases under Programmes and Initiatives were reported under EU own resources (€77.6 million), Hospital concession agreements (€46.0 million), Social security benefits (€45.5 million), St Vincent de Paul Residence service contract (€17.9 million), Waiting lists for medical services (outsourcing) (€11.0 million), Church schools (€10.3 million), Extension of school transport network (€8.3 million), Residential care in private homes (€7.1 million), Allocation in respect of local councils (€6.1 million), Tax relief measure (€5.9 million), Economic regeneration voucher scheme (€4.7 million), Agriculture support scheme (€4.3 million), Court judgements (€4.1 million), Provision of spare capacity – electricity (€3.5 million), Child care for all (€3.3 million) and Students’ maintenance grants (€3.0 million).

The interest component of the public debt servicing costs totalled €153.9 million, an increase of €2.4 million when compared to the previous year. By the end of October 2021, Government’s capital spending amounted to €504.3 million, €210.4 million lower than 2020. The drop largely resulted from the reclassification of the COVID-19 Business Assistance Programme (€262.0 million), which featured under Capital Expenditure between March and December 2020 but is now classified under Recurrent Expenditure. This decline outweighed an increase of €51.6 million reported in other capital projects.

The difference between total revenue and expenditure resulted in a deficit of €1,064.9 million being reported in the Government’s Consolidated Fund at the end of October 2021. Compared to the same period in 2020, there was a decrease in deficit of €177.3 million. This difference mirrors an increase in total Recurrent Revenue (€699.3 million), partially offset by a rise in Total expenditure, consisting of Recurrent Expenditure (€730.0 million), Interest (€2.4 million) and Capital Expenditure (-€210.4 million).

Changes in expenditure and revenue reflect developments related to COVID-19 (Table 1). At the end of October 2021, Central Government debt stood at €7,966.7 million, a €1,462.6 million rise from 2020. Increases reported under Malta Government Stocks (€905.0 million) and Foreign Loans (€419.9 million) were the main contributors to the rise in debt. The latter increase in debt was a result of the €420.0 million EU loan from the temporary Support to mitigate Unemployment Risks in an Emergency (SURE) instrument.

Higher debt was also reported under the 62+ Malta Government Savings Bond (€94.4 million), Treasury Bills (€42.5 million) and Euro coins issued in the name of the Treasury (€1.9 million). Finally, lower holdings by government funds in Malta Government Stocks resulted in a decrease in debt of €1.1 million.