Government deficit upwards of €600 million by end of April 2020

29th May 2020

Government’s capital spending increased by €77.4 million from 2019, largely due to additional spending towards investment incentives, including €50 million on the COVID-19 Wage Supplement.

According to the latest figures released by the National Statistics Office (NSO), the Government’s Consolidated Fund reported a deficit of €607.1 million by the end of April 2020.

Between January and April 2020, recurrent revenue fell by €220.1 million and totalled €1,167.6 million. This reflects a 15.9 per cent decline from the €1,387.7 million reported in revenue by the end of April 2019, according to the report.

A €109.0 million drop in Income Tax proved to be the main catalyst behind the decline in revenue. Further drops were also witnessed under Value Added Tax (€31.9 million), Licences, Taxes and Fines (€25.4 million), Customs and Excise Duties (€24.0 million), Grants (€23.5 million), Social Security (€22.0 million), Fees of Offi ce (€9.2 million) and Reimbursements (€5.2 million). In contrast, higher revenue was registered under Miscellaneous Receipts and Dividends on Investment.

By the end of April 2020, total expenditure amounted to €1,774.7 million, a 15.9 per cent increase from the corresponding period in 2019.

Recurrent expenditure totalled €1,491.2 million, a €170.1 million increase from the €1,321.1 million recorded by the end of April 2019. The main contributor to this increase was a €120.2 million rise reported under Programmes and Initiatives. Furthermore, rises in outlay were also registered in Contributions to Government Entities (€50.9 million) and Personal Emoluments (€4.7 million), while Operational and Maintenance Expenses declined by €5.7 million.

The main developments in the Programmes and Initiatives category involved added outlays towards social security benefits (€60.9 million, of which €5.2 million was spent on COVID-19 benefi ts), medicines and surgical materials (€23.2 million), church schools (€19.6 million), solid waste management strategy (€5.7 million), compensation payments (€5.2 million), street lighting (€4.9 million), extension of the school transport network (€4.7 million), EU own resources and feed-in-tariff (both €4.3 million).  

Drops were reported in the tax relief measure (€11.4 million) and the state contribution (€9.6 million, also reported as revenue).

The interest component of the public debt servicing costs totalled €61.7 million, a €4.4 million drop from the same period in 2019.

Government’s capital spending amounted to €221.8 million by the end of April, an increase of €77.4 million from 2019. The rise was largely due to additional spending towards investment incentives (€55.2million) which amounted to €73.0 million, including €50 million spent in relation to the COVID-19 Wage Supplement.  

Other increases were recorded in road construction and improvements (€16.0 million), property, plant and equipment (€11.3 million), the EU agricultural fund for rural development 2014-2020 (€6.8 million) and the ICT core services agreement (€3.0 million). On the other hand, there was a drop reported under EU internal security fund - borders and visa (€14.4 million). 

The difference between total revenue and expenditure resulted in a deficit of €607.1 million being reported in the Government’s Consolidated Fund by the end of April 2020. This represented an increase in the deficit of €463.2 million when compared to the deficit of €144.0 million witnessed during the same period in 2019. This difference mirrors an increase in total expenditure, consisting of recurrent expenditure (€170.1 million), interest (-€4.4 million) and capital expenditure (€77.4 million), in addition to a drop in recurrent revenue (€220.1 million). Decreases in revenue and increases in expenditure reflect developments related to COVID-19. 

By the end of April 2020, Central Government debt stood at €5,936.4 million, a €433.4 million rise from April 2019. This was primarily the result of a €320.2 million increase exhibited under Treasury Bills, as well as higher debt reported under Malta Government Stocks (€119.1 million) and Euro Coins issued in the name of the Treasury (€4.6 million). In contrast, there were drops in debt registered under the 62+ Malta Government Savings Bond and Foreign Loans. Higher holdings by government funds in Malta Government Stocks also resulted in a decrease in debt of €7.3 million.


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