2.4% rise in government debt

Government debt outstanding at the end of August stood at Lm1,031.3 million, up by Lm24 million, or 2.4 per cent, from the figure outstanding at the end of August last year, the National Statistics Office said yesterday.

However, compared to one month earlier, government debt declined by Lm18.2 million.

The structural deficit between ordinary revenue and total expenditure (less contribution to the sinking fund in respect of local and foreign loans as well as less direct repayment of loans) in the first eight months of the year amounted to Lm78.7 million, up by Lm8 million from a shortfall of Lm70.7 million for the same period last year.

Labour Party's spokesman for the economy, Leo Brincat said the recovery in the deficit promised by Finance Minister John Dalli had not materialised.

Compared to the first eight months of last year, ordinary revenue this year increased by 7.6 per cent and amounted to Lm448.3 million, the NSO said.

As mentioned in the previous Government Finance news release, the part-privatisation of the Malta International Airport had yielded Lm21 million in capital gains tax, duty on documents and dividends.

At the same time, total expenditure amounted to Lm533.1 million, an increase of 7.9 per cent, over the Lm494.1 million expended in the same period last year.

An increase of Lm10.5 million in dividends on investments, mainly due to the part-privatisation process of the MIA, contributed to a comparatively higher ordinary (or recurrent) revenue.

Another increase of Lm10.7 million was recorded under the licences, taxes and fines head of revenue. This was made up of receipts from oil rental fees and duty on documents, plus receipts previously shown under the lotteries head of revenue. Income tax collected throughout the period increased by Lm8.1 million, or 8.2 per cent.

A significant increase of Lm6 million was recorded under the Fees of Office head of revenue, mainly through proceeds from the Foreign Investment Scheme registration tax.

Customs and Excise duties increased by Lm3.6 million, mainly through excise revenues from machine-made cigarettes and petroleum. Consumption tax increased by Lm0.6 million, while revenue from social security contributions declined marginally by Lm0.1 million, or 0.1 per cent.

When compared to the same period last year, recurrent expenditure, excluding public debt servicing, increased by 8.6 per cent and amounted to Lm418.6 million, from Lm385.4 million expended last year.

Personal Emoluments to date amounted to Lm129.9 million, compared with last year's outlay for this category of Lm128.3 million.

The operational and maintenance expenditure category increased its outlay by Lm4.4 million and totalled Lm33.1 million, up from last year's figure of Lm28.7 million. This year, there has been more settlement of bills related to the Materials and supplies item of expenditure (Lm15.1 million this year against last year's Lm11.5 million) mainly on account of the Health Division's medical and surgical expenditure.

The outlay in respect of special expenditure at Lm0.33 million represented a decline of 4.2 per cent over the expenditure effected last year (Lm0.34 million).

The expenditure incurred on the programmes and initiatives category last year amounted to Lm204.7 million and stood at 63.7 per cent of the final outturn (Lm321.6 million). This year's outlay of Lm213.7 million represents 62.5 per cent of this year's budget estimates.

This year's higher expenditure mainly represents increases in social security benefits (+Lm4.6 million), and NPAA-related activities, mainly those undertaken by the Education Ministry. The latter element was last year implemented later on in the year.

The outlay on the Contributions to Government Entities category this year amounted to Lm41.6 million, an increase of Lm18.3 million over the Lm23.3 million expended last year.

This increase includes Lm17.5 million which during 2001 were accounted for under Capital Expenditure as operational and debt servicing costs of entities like Malta Drydocks, Malta Freeport Corporation and MGI/MIMCOL, or withdrawn from the Treasury Clearance Fund instead of from the Consolidated Fund.

Furthermore, expenditure in respect of entities like Malta Statistics Authority, and the Roads and Licensing and Testing Directorates, which this year is accounted under this category, was last year featuring in the form of a normal vote.

Percentage-wise, the Contributions to Government Entities last year accounted for 44.8 per cent of the final outturn (Lm52 million), compared to 57.4 per cent spent during the same period this year when compared to the budgeted figure (Lm72.4 million).

Last year, the reclassification of expenditure items of a recurrent nature from the Capital to Recurrent was effected en bloc at the end of the year.

The interest portion of public debt-servicing costs this year increased by 9.1 per cent, from Lm39.7 million last year to Lm43.4 million this year. This increase was mainly the result of loans borrowed during 2001 and more resort to Treasury Bills this year than last year.

So far as the capital expenditure is concerned, this year's outlay has exceeded last year's by 4.6 per cent and amounted to Lm65.1 million. This comparative increase was due to higher expenditure related to sundry roads projects (Lm3.4 million), on the new hospital (+Lm4.9 million), and the Shipyards' early retirement schemes (Lm6 million). On the other hand, this year capital expenditure excludes Lm17.5 million representing outlays in respect of entities, which last year featured under Capital Expenditure, and this year are being reported under Recurrent Expenditure.

In his statement, Mr Brincat said that revenue was not growing as fast as before, a reflection of the poor economic performance. In fact, the increase in the revenue collected from VAT was less than the inflation rate for the same period, meaning that less was collected in real terms.

The reduction in social security contributions was the result of the decrease in the number of gainfully occupied persons, and the increase in unemployment, he said.