Public debt has registered its highest increase since 2009, according to figures published by the National Statistics Office.

By the end of June compared with June 2013, government debt grew by €464 million.

The increase is higher than usual as on average the debt was rising by about €300 million a year (see table, right).

Asked for an explanation, the Finance Ministry said the higher-than-usual increase was a result of a technical exercise known as stock-flow adjustment adopted by the Treasury.

Stock-flow adjustment is related to the maturity and issuance of government stocks and bonds.

“The increase in debt during the first months of 2014 is a result of a front-loaded programme adopted by the Treasury across the first half of the year,” a spokesman for the Finance Ministry said.

“The issuance strategy mirrors the strategy adopted in recent years, where fundraising is typically biased towards the start of the year.”

The Maltese government normally borrows its funds using two separate mechanisms.

It issues government bonds to borrow for the long term and treasury bills to borrow in the short term.

This year’s borrowing needs have been higher than usual.

Between June 2013 and last June, the government borrowed €373.8 million through bonds and another €71.3 million in treasury bills.

However, according to the Finance Ministry, the funds raised were also needed to finance the redemption of another stock ending in July.

Malta has already been criticised in the past over its high public debt.

In order to address the issue, last year the government submitted a plan to Brussels giving details of how the island would adhere to EU rules and cut its debt levels by 2014.

In its plan, the government had projected that debt should reach 73.2 per cent of GDP by the end of this year and will continue to drop in the following years.

However, these recent statistics show that, by the end of June, debt had already reached 75 per cent of GDP, almost two percentage points higher than the end of year projections.

It is still to be seen whether the debt will drop by the end of the year to the forecast targets.

The island’s increasing debt was also criticised by credit rating agency Moody’s in its latest assessment.

Identifying it as one of Malta’s most pressing problems, Moody’s said that “further fiscal consolidation efforts” were needed and that Malta’s government debt “is high compared to some of its rating peers”.

“The debt guarantees by Malta’s government is also large, reaching €1.2 billion, or 16 per cent of GDP, by the end of 2013,” the rating agency said.

Maltese government debt Q2 – 2009 – 2014