Mangion questions whether finances are in order after all

The €80 million (Lm34.3m) deficit rise in the first five months of this year shows that the government could have taken Parliament for a ride before the general election, Labour finance spokesman Charles Mangion told The Sunday Times yesterday.

"Some things ought to have been foreseen in the budget estimates, but today I believe they conveniently were not," Dr Mangion said.

The shortfall between recurrent revenue and total expenditure increased by €80.7 million in the first five months of the year over the same period of 2007 and amounted to €235.8 million, the National Statistics Office said on Friday.

An increase of €118.6 million in total expenditure was only partly offset by an increase of €37.9 million in recurrent revenue.

Describing the financial situation as worrying, Dr Mangion said the figures did not reflect expectations.

The budget estimates for 2008 had forecast total expenditure to increase by €66 million (Lm28.3m), but in the first five months it has already shot up by €80 million, he said.

Therefore the government's target of increasing expenditure by three per cent in order to be on a par with economic growth had already gone haywire, Dr Mangion said.

"How realistic were the estimates for 2008 approved by Parliament? Were they pre-election manipulation or are the finances not that sound after all?" he asked.

The problem seemed to be of a structural nature, he said, with the increase of personal emoluments reflecting an intake of new government workers before the last election.

On the other hand, subsidies have dropped by €1.6 million (Lm687,000) in the first four months as the government eliminated initiatives such as the home subsidy scheme.

Dr Mangion highlighted that Eurostat recently released figures which showed that the tax burden had increased in Malta more than in other EU states. Yet expenditure was not being reined in.

Nevertheless, the Labour spokes-man said, it was too early to forecast whether the government would reach its target of reducing its deficit.

"I don't mean to sound alarmist, but are our finances really on a sound footing? Are we really reining in expenditure?"

Finance Minister Tonio Fenech could not be contacted for comment.