Government borrowing upped to €2 billion

Ray Bugeja - 5th May 2020

The decision to borrow more money was approved by Parliament in late March

The Government has decided to more than quadruple its borrowing this year in view of the economic ills brought about by the outbreak of the coronavirus.

In terms of legal requirements, the Treasury had officially announced at the beginning of the year that Malta Government securities and debt instruments with a maturity of more than one year are not expected to exceed €450 million for the financial year 2020.

The Ministry of Finance and Financial Services had said the funds raised would be applied mainly to finance the Government’s borrowing requirements for 2020 and to make changes in the Government debt portfolio, as and when required, in line with official debt management policies.

The Treasury had originally planned to fund the financing requirements for this year over four to five issues.

However, plans had to be changed in view of the pandemic that caused widespread havoc across the globe not just in everyday life but also to the world economy.

“The outbreak of COVID-19 induced the Government to revise upwards the maximum amount that it could borrow during the current year from €450 million to a sum not exceeding €2 billion (Budget Measures Implementation Act, Cap 608 of the Laws of Malta),” Finance Minister Edward Scicluna said when asked following recent issues of Government stocks.

Prof. Sciclina noted that thet House of Representatives unanimously approved the new level of borrowing during a parliamentary session held on the 30th March. This, he added, was necessary to meet the immediate financing needs resulting from the Government’s response to COVID-19.

“While the current circumstances require a more flexible approach relative to established issuance practices, the Treasury remains committed to its core principles of transparency, consistency and accountability,” the Finance Minister pledged.