Structural deficit increases, capital expenditure decreases

The Government’s financial figures for the January to November period have recorded increases in public debt and the structural deficit. Although revenues were up, the increase in recurrent expenditure has only been cushioned by the privatisation of the Malta International Airport. Capital expenditure on the other hand, has been on the downfall.

A 5.5 per cent increase was recorded in Government’s recurrent revenue for 2002, with revenue up to Lm613.1 million. Recurrent revenue made up 83.4 per cent of this year’s budget forecast.

Although revenue figures increased by over Lm33 million during January and November 2002, a substantial part of the figure is owed to the part-privatisation of the Malta International Airport which yielded Lm21 million in capital gains tax, duty on documents and dividends.

Recurrent expenditure has been on the rise as figures point towards a 5.7 per cent increase over 2001’s expenditure. Total expenditure for the year amounted to Lm729.3 million, as against the January-November 2001 period figure of Lm690.3 million.

This has left the structural deficit between recurrent revenue and total expenditure at Lm109.6 million, up by Lm13.4 million from a shortfall of Lm96.2 million for the same period one year ago.

Government said that the increase in recurrent revenue during 2002 was mainly due to an increase of Lm12.3 million in licences, taxes and fines, oil rental fees and duty on documents, as well as lottery receipts.

Excluded from the structural deficit calculations are Lm19 million from sale of shares in MIA and Lm11.1 million in sinking funds of converted loans. These revenues are considered as non-recurrent transactions and are excluded from the calculation of the structural deficit.

Recurrent expenditure, excluding debt servicing, amounted to Lm580.9 million, up Lm45.6 from last year. Recurrent expenditure for the period under review makes up 88.3 per cent of this year’s budgetary estimates, up from 87.1 per cent of the actual final outturn for last year.

Interest on debt servicing increased this year 8.2 per cent (Lm4.5 million) from Lm55.4 million last year to Lm60.0 million this year. This increase was mainly the result of loans borrowed during 2001.

Personal emoluments amounted to 90.2 per cent of the budget forecast (Lm197.6 million).

Capital expenditure has however decreased by Lm4.8 million, or 5.6 per cent. Government said that there had been more expenditure in 2002 in projects for sundry roads (Lm2.4 million), the new hospital (Lm3.3 million), and the Shipyards’ voluntary retirement schemes (Lm6.5 million).

The expenditure incurred on the Programmes and Initiatives category last year amounted to Lm283.7 million and stood at 88.2 per cent of the final outturn. This year’s outlay of Lm296.7 million represents 86.8 per cent of this year’s budget estimates. The increase, in absolute terms, of Lm12.9 million this year is mainly due to increases in social security benefits of Lm6. million, treasury pensions (Lm3.2 million) and NPAA-related initiatives, mainly those undertaken by the Customs Department and the Ministry of Education.

Provisional statistics supplied by the Central Bank of Malta report that Government Debt outstanding at the end of November stood at Lm1,047.8 million, up by 0.1 per cent from Lm1,046.7 million outstanding at the end of November last year.

Treasury Bills and Malta Government stock accounted for Lm199.0 million or 19.0 per cent, and Lm813.0 million or 77.6 per cent respectively. The remaining share of Lm35.8 million or 3.4 per cent was made up of foreign borrowing. At the end of November, Government debt was Lm35.1 million higher when compared with the end of last year. Compared to one month earlier, Government debt increased by Lm12.5 million.