Finance Minister Edward Scicluna.

The Finance Minister is not concerned about a deficit that soared in the first three months of the year on the back of a substantial rise in expenditure.

“The situation is not worrying as the increases are only of a temporary nature,” Edward Scicluna told this newspaper, following the latest data issued by the National Statistics Office.

Prof Scicluna said the government was still committed to lowering the deficit to 2.1 per cent of GDP, as estimated in the last Budget.

According to the NSO – which was again criticised by the Finance Minister for not given the necessary explanations on the statistics – the island’s deficit between January and March shot up by more than €132 million, an increase of €25 million over the same period in 2013, which was also an election year. Although income has on the whole been healthy, increasing by 2.9 per, expenditure reached €819 million, nearly six per cent higher than last year.

The spending rise was caused mainly by two sectors, an €18 million increase in the government’s wage bill and another €20 million in social benefits.

There are no alarm bells and the situation is under control

“I am checking all the time about the evolving situation and it seems that the increase in expenditure is just temporary due to certain timing factors such as the payment of pensions before their normal cycle when compared to last year,” Prof. Scicluna said.

“There are no alarm bells and the situation is under control.”

Asked whether the government might be obliged to review its spending plans if the situation worsened, Prof. Scicluna said reviews were continuous.

Emphasising that he has the PM’s blessing on this strategy, he said: “I can assure you that wherever we see there is higher spending we will take the necessary measures to tweak expenditure and control it.”

In order to lower the deficit to 2.1 per cent of GDP this year, the government is expected to cut expenditure by a further €50 million compared to 2013. Last year the deficit was cut by 0.6 per cent to end on 2.7 per cent.

Despite reaching the target established by the EU to lower the deficit to below three per cent of GDP, Brussels insists on retaining its deficit procedures against the island as it wants to make sure the control is of a permanent nature.

The statistics also show growing debt. Reaching €5.5 billion by March, it rose by €329 million over the same period in 2013.