Deficit target for 2013 is set at 2.7 per cent

Finance Minister Edward Scicluna poses with the black attaché case ahead of presenting the Budget last night, with ministry Parliamentary Secretary Alfred Camilleri. Photo: Darrin Zammit LupiFinance Minister Edward Scicluna poses with the black attaché case ahead of presenting the Budget last night, with ministry Parliamentary Secretary Alfred Camilleri. Photo: Darrin Zammit Lupi

The implementation of Budget 2013 prepared by the previous Administration will raise the deficit by €68 million, but the Government still plans to keep the shortfall at 2.7 per cent of GDP, Finance Minister Edward Scicluna said yesterday.

Prof. Scicluna said the higher figure included a €44 million drop in revenue between November, when the budget was originally presented, and now, and €10 million to finance measures announced by the previous government in its Budget 2013 but for which there was no fiscal provision.

Such measures included the increase in stipends, the Youth Organisation Projects, the Out of Home Care Programme, the Residential Home for Youth and the After Schools Programme. He said this Government would retain them and find funds for them.

The claim there was no money budgeted for these projects was vehemently denied by the Opposition.

Prof. Scicluna said the former Government had also signed new collective agreements with nurses, doctors and Mcast teachers without making financial provisions for them.

Government revenue for 2012 stood at €150 million below projections, with Enemalta accounting for almost half of the shortfall by not transferring €66 million in taxes and duties to the Government.

In his Budget speech, Prof. Scicluna said the true picture of the public finances was kept under wraps by the previous Administration.

He said a stock-taking exercise over the past few weeks revealed that the PN Government had spent more money than was projected.

For example, an extra unbudgeted €21 million had been spent on eco reductions and street lighting.

“With a deficit of 3.34 per cent, this means that Malta will technically face an excessive deficit procedure by the European Commission. The Commission is going to be very disappointed with this fiscal slippage especially when the country had plans to start reducing its deficit and projected a 1.7 per cent deficit.

“However, we are committed to rein in the deficit and start reducing it from this year, targeting a 2.7 per cent deficit by the year end,” he said.

He said the new Government will, over a period of years, remedy Malta’s financial situation by doing away with outdated work practices and being more careful in its spending.

Taking extracts from the Labour Party’s electoral programme, Prof. Scicluna said the Government will work towards simplifying administrative procedures by, among others, reviewing laws on businesses to remove undue burdens.

The jobs strategy will be based on a clear economic policy, a diversified economy and incentives to promote trade and investment.

The public sector, he said, has to become more dynamic and responsive to current and future challenges. Departments must understand that they are at the service of the people and business and they should give the country a return for the funds invested.

He appeared to distance himself from the Budget he presented yesterday, telling the press at a briefing earlier that “this is not my Budget, but if I were to give it a name, I would call it A Stocktaking Exercise”.

“My first Budget will be that of 2014 and I will start talks about it with the European Commission next Friday in Dublin,” he said.


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