Deficit narrows by €50m
Member states cautioned to cut down on public deficits
The deficit in the first six months contracted by almost €50 million when compared to the same period last year, according to figures released by the National Statistics Office.
With the government seeing an increase of more than €88 million in revenue, the deficit at the end of June stood at €287.7 million, down from the €337.5 million in the same month last year.
According to budgetary estimates, the government is projecting an end-of-year deficit of almost €239 million.
Recurrent revenue stood at €1 billion at the half way mark, an increase of nine per cent over the same period last year. Revenue generated in the first six months is equivalent to 43 per cent of what the government is anticipating by the end of the year.
Income tax receipts were €30.6 million higher while VAT yielded €21.2 million more than in the same period in 2009. Social security contributions also registered an increase, of €3.3 million.
The higher revenue reflects the improved economic scenario in the first half of the year. Statistics issued last month showed that the economy grew by more than three per cent in the first quarter.
The higher tax take was partially offset by an increase in expenditure of almost €39 million, driven mainly by higher payouts in social security benefits.
At the end of June, the country's debt stood at €4.1 billion, a rise of €283.9 million over the same period last year. The NSO figures show that interest paid out on the debt stood at €98.4 million. Debt is expected to reach almost 70 per cent of GDP, 10 percentage points higher than the EU benchmark.
When launching the pre-budget document earlier this week, Finance Minister Tonio Fenech said that deficit reduction was a priority for next year in order to start reining in the debt.
The deficit this year is expected to be at a level of 3.9 per cent of GDP and the target is for this to go down to 2.9 per cent. In the wake of the Greek economic meltdown that threatened the euro zone's stability, member states are being cautioned by the Commission to cut down on public deficits.
ksansone@timesofmalta.com