Deficit 'not getting any better'

The government's deficit did not get any better this year, the Labour Party's spokesman for finance, Charles Mangion, said, quoting National Statistics Office data.

Dr Mangion said the increase in tax revenue in the first four months of the year was due to a one-time amnesty through which the government garnered €42 million. While this was positive, it could not be interpreted as an improvement in the sustainability of finances.

The fiscal situation was escaping the government's control, especially considering that subsidies on the water and electricity rates were cut and no compensation was paid to former shipyard employees this year.

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

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 rose by nearly €49 million with the central government debt reaching almost €4 billion up to April. This meant that every child born carried a debt of €10,000.

Interest on debts in the first four months increased by nearly €1 million, Dr Mangion said.

The Finance Ministry said the EU had confirmed that, last year, the only two member states to reduce their deficit were Estonia and Malta.

Malta's deficit was cut to 3.8 per cent compared to the EU average of 6.8 per cent, so much so that Malta 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 also had 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, the ministry said.