13 July 2005

The Web

Prime Minister quotes misleading expenditure figures

Kurt Sansone

Government expenditure is not declining as the Prime Minister suggested during last Saturday’s monthly briefing, instead it has climbed from just over Lm370 million between January and May last year, to just over Lm403 million in the same comparative period this year.
The positive figures quoted by Lawrence Gonzi last week showing how “general government final consumption expenditure declined by Lm6.2 million” do not result from statistics issued by the National Statistics Office for the January-May period.
Under the heading ‘Maltese Economic Growth’, the second paragraph of the four-page handout given to the media states that the decline in government consumption expenditure amounted to 5.6 per cent. This drop was attributed to lower expenditures on materials and supplies across the government sector.
The Prime Minister went on to boast that “this reflected Government’s stated objective of containing its expenditure levels within acceptable limits.”
The particular expenditure item quoted by the Prime Minister does not feature in the statistical breakdown of Government finance published by the National Statistics Office. But even if the expenditure item quoted by Gonzi does reflect a positive decline, the overall picture is anything but rosy.

Between January and May this year recurrent expenditure increased by Lm14.1 million or 4.7 per cent when compared to 2004. Recurrent expenditure now totals Lm311.8 million and makes up 41 per cent of the budgetary estimates for 2005.
The only positive indicators are the outlays on the Personal Emoluments category, which includes public service wages and the Contributions to Government Entities category. Personal emoluments registered only a marginal increase of less than Lm0.1 million this year over last. Up to the end of May personal emoluments amounted to Lm76.7 million and made up 36.9 per cent of the budget forecast.
On the other hand, contributions to government entities during the first five months of 2005 decreased by Lm2.6 million.
But each and every other expenditure item listed by the NSO portrays a glum picture.
Expenditure under the Operational and Maintenance expenditure category amounted to Lm16 million during the first five months of 2005 as compared to Lm24.8 million last year. The main reason for the decline, however, is a reclassification of expenditure on medical and surgical materials which was transferred under the Programmes and Initiatives category in 2005.
Expenditure under Programmes and Initiatives this year amounted to Lm186.1 million, an increase of Lm25.5 million
The interest component of the public debt servicing costs this year increased by Lm1.2 million, while interest on Government stocks increased by Lm1.8 million.
Capital expenditure also registered an increase of Lm10.8 million during the first five months and now stands at Lm52.7 million.
The NSO says that outstanding Government debt at the end of May amounted to just under Lm1.4 billion, an increase of Lm52.5 million over the same period last year.
The deficit between recurrent revenue and total expenditure during the periods under review amounted to Lm93.1 million this year, compared to Lm85.7 million in 2004.



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