Despite lack of surplus and growing deficit, government says fiscal data ‘in line with targets’

Despite lack of a budgetary surplus and a growing deficit, government insists that the less than desirable fiscal data released on Friday was “in line with targets”.

Data released by the National Statistics Office on Friday showed a €156.2 million deficit in the Government’s Consolidated Fund by the end of June 2019, higher than the deficit of €141.9 million registered a year earlier.

The Ministry for Finance, however, welcomed Friday’s data set, which it said shows that for the first half of this year, government revenue remained buoyant with the increase in tax revenue rising by €218 million or 12.5 per cent, reflecting an increase in employment income coupled with a record low unemployment rate.

“The fiscal data for the first half of the year is in line with the ministry’s forecasts for the first six months. As with previous years, we will ensure that while expenditure growth will take care of the country’s economic, social and environmental needs, it will be kept in line so as to provide a modest surplus,” said Finance Minister Edward Scicluna.

Expenditure on public investment projects increased by €77 million for the first half of this year reflecting the various Government projects currently being undertaken, in particular the projects to upgrade Malta’s infrastructure.

Recurrent expenditure increased by 11.7 per cent with the highest contributor being expenditure on programs and initiatives. This category of expenditure reflected the various growth-enhancing social budget measures implemented during this year.

Recurrent revenue rose by €266.2 million and amounted to €2,164.5 million, a 14 per cent increase from the €1,898.3 million reported in revenue during the corresponding period in 2018.

The primary reason for the increase was a €90.9 million rise in Income Tax. Further increases were also registered under Value Added Tax (€56.9 million), Social Security (€47.0 million), Grants (€44.3 million), Licences, Taxes and Fines (€15.7 million), Rents (€10.1 million), Customs and Excise Duties (€7.3 million), Miscellaneous Receipts (€6.8 million), Fees of Office (€3.6 million) and Reimbursements (€3.5 million).

Conversely, drops were recorded under Dividends on Investment (€11.9 million) and Central Bank of Malta (€8.0 million).

Total expenditure by the end of June 2019 meanwhile stood at €2,320.7 million, a 13.7 per cent increase from the corresponding period in 2018.

Recurrent expenditure stood at €2,066.9 million, €210.3 million higher than the corresponding amount registered by the end of June 2018. The main contributor to this increase was a €141.3 million rise reported under Programmes and Initiatives.

Rises were also registered by Personal Emoluments (€34.6 million), Contributions to Government Entities (€21.1 million) and Operational and Maintenance Expenses (€13.4 million). The main developments in the Programmes and Initiatives category involved added outlays due to EU own resources (€29.2 million), state contribution (€18.3 million that also features as revenue), extension of school transport network (€16.2 million), social security benefi ts (€15.0 million), contingency reserve (€12.9 million), tax relief measures (€11.5 million), medicines and surgical materials (€9.5 million), cancer treatment, landscaping – Malta (both €6.8 million), ex-gratia payment - motor vehicles (€4.9 million), child care for all (€3.5 million), solid waste management strategy (€3.4 million), residential care in private homes (€3.3 million) and the feed in tariff (€2.5 million).

Government’s capital expenditure registered an increase of €76.8 million from the same period last year and added up to €219.5 million. The rise in outlay was due to increased outlay reported on road construction and improvements (€22.2 million), EU Internal Security Fund - Borders and Visa (€14.6 million), EU cohesion fund 2014-2020 (€14.2 million), EU structural funds 2014-2020 (€13.3 million), and investment incentives (€10.7 million).