Government spending growing faster than the GDP - MLP

The government’s recurrent expenditure in the first first four months of the year grew four times faster than the economic growth rate, Charles Mangion, acting leader of the Labour Party said in a statement.

The deficit grew to €209 million at the end of April, up €77 million since the start of the year.

Recurrent expenditure was up by 16%. As a result, Dr Mangion observed, even though revenue from income tax and VAT was higher, because of higher prices, the government financial situation was far fromsound, despite what was claimed before the general election.

He said the PN strategy to win the election at all costs appeared to have impacted on this sector as well.

However he added, the “astronomical” increase in recurrent expenditure was structural and not temporary.

As a result of pre-election recruitment and promotions, the government wage bill had risen by 9% per month between January and April. (The government in its own statement to explain the increase in spending had put most of the cause on increased outlay on social services, notably children’s allowance).

Dr Mangion said the government was now realising that it was losing control of the financial situation and was therefore withdrawing various schemes, such as equity share scheme for home buyers, the subsidy on bread and the refund on eco-friendly appliances.

Furthermore, the Finance Minister as giving the impression that the government would not keep the PN’s biggest election promise – that of reducing the maximum rate of income tax to 25 percent in the coming Budget.