Updated: Improvement in government deficit

(Adds PL statement)

The shortfall between the government's recurrent revenue and total expenditure in the first five months this year amounted to €150.8 million, down by €137.4 million when compared to the corresponding period in 2010, the NSO said.

It said that, in the period, recurrent revenue increased by €131.6 million, while total expenditure registered a decline of €5.8 million, resulting in an improvement in the government deficit when compared to the corresponding period last year.

During the period under review, recurrent revenue stood at €980.8 million, up by 15.5 per cent over last year.

Most revenue components registered increases, mainly Value Added Tax (+€39.7 million), Customs and Excise (+€27.5 million), Grants (+€24.8 million) and Social Security (+€20.3 million).

Conversely, a reduction in proceeds was recorded from Income Tax (-€3.2 million) and Rents (-€3.0 million).

Total expenditure stood at €1,131.6 million, down by €5.8 million when compared to the first five months last year, as a result of lower outlays on recurrent expenditure and interest payments.

Capital expenditure remained at the level recorded last year.

The decline of €4.3 million in recurrent expenditure was driven by lower social security benefits and contributions to government entities, by €13.6 million and €11.6 million respectively.

These were partially outweighed by the payments of an administrative fee to Transport Malta of €5.5 million, an increase in public service obligations of €9.4 million, higher expenditure on streets and roads lighting (+€4.6 million) and medicines and surgical materials (+€ 3.4 million).

Capital expenditure was recorded at €109.5 million. The additional €11 million transferred to the Treasury Clearance Fund, the added cost on PC Leasing (+€3.9 million) and on the EU Agricultural Fund for Rural Development (+€3.8 million) were outweighed by the completion of the Malta South Sewage Infrastructure, meaning negligible outlay on the latter project this year.

The interest component of the public debt servicing costs for the period under review declined by €2.1 million and reached to €88 million.

At the end of May, the central government's debt stood at €4,446.1 million, up by €269.8 million, or 6.5 per cent, over the corresponding period last year.

This was the result of higher long-term borrowing, which added €507.6 million.

On the other hand, short-term securities and foreign borrowing dropped by €229.6 million and €13.3 million, respectively.

PL STATEMENT

In a statement, Labour's finance spokesman Karmenu Vella called on the government to give several explanations about the statistics.

He said that apart from the fact that administrative change in VAT did not make the figures comparable to what they were in the same period a year ago, according to the latest figures, the deficit dropped by €137.4 million on what it was a year ago.

According to the statistics, this was because of increases in income, especially from taxes.

Taxpayers were currently making up for the increase in income on excise from fuel, cigarettes, a new excise tax on cement and an increase in the tax on employers and employees.

However, this was also contradictory.

For although the deficit in May was €9 million and the government loaned €11 million, it was supposed to borrow €20 million between the end of April and the end of May.

However, it borrowed €159 million.

The government, Mr Vella said, should explain this discrepancy.