Deficit reaches €265m by March

The government has seen its financial position deteriorate by a further €55 million in the first three months of the year, confirming the negative downward trend in public finances.

Figures published yesterday by the National Statistics Office show that the deficit in the first quarter stood at €265 million, 26 per cent higher than that recorded in the same period last year.

In the next quarters the government would be expected to draw in increasing revenues, however, it is still to be seen how the growing deficit will affect the government's deficit target of €99 million for 2009.

Government expenditure stood at €693 million, an increase of almost €31 million when compared to the first three months of last year.

The deterioration in public finances was compounded by significant drops in revenue.

Lower income from consumption and excise taxes clearly points towards a slowing economy as confirmed by the latest Eurostat figures for last year, which showed the economy entered a recession in the last quarter of 2008.

The government collected almost €10.5 million less from Customs and excise taxes and almost €11 million less in VAT. Revenue from income tax was also down by more than €4 million.

The only positive upturn was registered in social security contributions with the government collecting €18.5 million more than last year. The NSO noted that the substantial increase in social security was primarily due to deferred payments that were owed to the government in 2008.

Government debt in March was up by €351 million and now stands at a whopping €3.6 billion.

Interest payments for government debt increased to €65 million, or nine per cent over the first quarter of last year.

ksansone@timesofmalta.com