Minister explains €40m deficit discrepancy
'NSO data collected on cash basis, while the government's is carried out on an accrual basis'
Last year's deficit reached €297 million, €40 million higher than the government's forecast in the November budget, according to official figures released yesterday.
However, Finance Minister Tonio Fenech defended the forecast when asked to justify the large discrepancy with the National Statistics Office figures.
"NSO data is collected on a cash basis while the government does its accounting on an accrual basis. Our data shows we ended the year with a deficit of 3.8 per cent (of GDP) as projected and we have already passed on the data to the EU Commission," Mr Fenech told The Times.
Accrual accounting takes into consideration income when it is earned and expenditure when it is incurred while accounting on a cash basis includes income when it is received and expenditure when payments are made.
The figures released by the NSO are based on data obtained from the government's consolidated fund. They showed that a €68.6 million increase in recurrent revenue over the previous year was offset by an increase in total expenditure of €132.5 million.
According to the NSO, recurrent revenue was recorded at €2.4 billion, an increase of three per cent over the previous year.
The increase was brought about by higher earnings from grants (€42.7 million), licences, taxes and fines (€17 million), social security contributions (€16 million) and transfers from the Central Bank of Malta in respect of previous year's profits (€12.9 million).
Lower returns were recorded from customs and excise duties (-€3.4 million), miscellaneous receipts (-€9.4 million) and dividends on investment (-€5.1 million).
Total expenditure went up by €132.5 million, mainly as a result of higher recurrent and capital expenditures.
Recurrent expenditure increased by €80.3 million, totalling €2.2 billion, with the largest increase recorded in programmes and initiatives by €36.3 million.
The regular increases in programmes and initiatives were in social security benefits (€37 million), medicines and surgical materials (€19.6 million), third country nationals (€6.9 million), influenza combating measures (€5.6 million) and solid waste management strategy (€3.7 million).
These were partly offset by declines in energy support measures (-€59.8 million), and streets and roads lighting (-€4.8 million).
Public service wages added €24.5 million to government's total expenditure while contributions to government entities went up by €7.9 million.
Government paid €3 million more in interest on outstanding debt. The total interest paid was €192 million.
In 2009, the government's capital expenditure was recorded at €271.3 million, up by €49.2 million. The main increases were in the EU external borders fund (€15.5 million), EU agricultural fund for rural development (€8.6 million) and film industry incentives (€6.5 million).
Debt totalled €3.9 billion, an increase of €361.8 million.