The shortfall between the government's income and its spending has dropped by €39.8 million to €196 million in the first four month of this year when compared to the same period in 2009.

The 16.9 per cent reduction came after a boost of €25.2 million in revenue, coupled with a drop of €14.5 million in spending.

Total recurrent revenue stood at €690.2 million, representing a 3.8 per cent increase over last year. The increase came about due to a €24.3 million rise in income tax revenue, combined with an €18.4 million increase in VAT revenue.

Social security revenue dropped by €8.2 million; licences, taxes and fines revenue declined by €7 million and grants shrunk by €5.9 million.

Expenditure, which stood at €886.2 million in the first four months, dropped by 1.6 per cent compared to the same period in 2009.

Despite an increase in expenditure on social security benefits of €15.8 million and the reclassification of the Malta Tourism Authority, which shifted €13 million from capital to recurrent expenditure, recurrent expenditure went down by €4.4 million, totalling €743.2 million. The increases were outweighed by cuts in spending on medicines and surgical materials (-€14.5 million) and street lighting and other services (-€5.6 million) apart from the fact that last year the government had to finance the shipyards' voluntary retirement schemes.

The interest component of the public debt servicing costs rose marginally from €72.5 million in January-April 2009 to €73.4 million this year.

At the end of last month, government debt stood at €3,992.8 million, an increase of €237.8 million when compared to the corresponding month last year.