After having scrutinised the various revenue and expenditure components within the Budget for 2018, the Malta Fiscal Advisory Council has given the thumbs up to the projections for the fiscal balance and the public debt, saying that these lie within its endorsable range.
In its risk assessment, the Council said the fiscal balance could be even better than projected as it is possible that in 2017 tax revenues and inflows from the Individual Investor Programme may exceed the targets.
On the other hand, expenditure may be less than planned, particularly because spending on compensation of employees and on gross fixed capital formation may be less than budgeted for.
There is also the possibility that there will not be any need to resort to the Contingency Reserve – a reserve mandated by the Fiscal Responsibility Act to cater for unexpected and exceptional expenditures – which would lead to further expenditure savings.
The upside risks to the fiscal balance appear to be less strong in 2018, it said. In this case, the possibility of higher-than-projected revenue is related to the possibility of above-target proceeds from the Individual Investor Programme, while the possibility of lower-than-projected expenditure is mainly contingent on the possibly slower-than-planned progress in gross fixed capital formation, and again on the non-recourse to the Contingency Reserve.