Updated - Government deficit has not narrowed - Opposition

No improvement has been registered in the government’s deficit according to statistics published by the National Statistics Office for the first four months of this year, the Labour Party’s spokesman for finance said.

Charles Mangion said that the increase in tax revenue was the result of the one-time amnesty through which the government garnered - €42 million. While this was positive, it could not be interpreted as an improvement to the sustainability of finances.

Moreover, when one quantified the fact that the government this year did not pay any compensation to former shipyard employees and reduced subsidies on the water and electricity rates, one would logically conclude that the fiscal situation was escaping the government’s control.

Dr Mangion said government income from EU grants, which the country had a right to, was some €6 million lower than last year and €3 million less than in 2008.

This had to be explained in view of the government’s promise that productive investment this year had to increase. In the first four months of 2010, productive investment dropped by nearly 14 per cent.

When it came to recurrent expenditure, this was only reduced by €4 million in spite of the much lower subsidies on water and electricity, a lower expenditure of €15 million for medical needs and the halt in payments to shipyard employees.

The country’s debts in the first four months increased by nearly €49 million with the central government debt reaching nearly €4,000 million up to April. This meant that every person born carried a debt of €10,000. Interest on debts in the first four months increased by nearly €1 million, Dr Mangion said.

GOVERNMENT REACTION

In a reaction, the Finance Ministry said the EU had confirmed that during 2009, the only two member states to reduce their deficit were Estonia and Malta..

Malta's deficit was reduced to 3.8% compared to the EU average of 6.8%. Malta's financial position was such, that it had been asked to help other countries.

Furthermore, several European countries had been forced to resort to austerity measures including raising taxes, sacking public sector workers and raising the retirement age. They had also reduced their social and education spending.

In the height of the crisis, Malta had managed to control unemployment and attract foreign investment, while investment in education, health, the infrastructure, the environment and the social sector had continued.