The published data on government income and expenditure illustrates a continuation of a trend that had started earlier this year. So, barring any surprises in the last three months of this year, we should be noting a definite improvement in some of the fundamentals that make up government finances.

The data on public finance for the first six months of this year had indicated a control of government expenditure which, if it were coupled with the achievement of the targets set for government revenue and the targets set for GDP growth, would have managed to address the public sector deficit in one big swoop.

In terms of expenditure this element of control has continued to be exercised. In June of this year total expenditure was 3.8 percentage points below estimated expenditure. This means that total expenditure stood at 46.2 per cent of total expenditure with 50 per cent of the year gone. By September the gap had risen to 6.2 percentage points as total expenditure had risen to 68.8 per cent with 75 per cent of the year gone.

This improved position may be due to the fact that during the three summer months public service departments work on a half day basis so they have less time to spend money.

In fact this is not the first year that this has happened. It is the extent of the improved position that makes this year's result significant.

The challenge for the next two (now that October has passed) months is all too obvious for the Minister of Finance, his Parliamentary Secretary and the senior management of the public service - seek to kill the habit of public servants (and probably ministers) spending budgeted monies even though there is no real need for that expenditure to take place.

The fact that the money has been budgeted should be no reason to spend it, even though there may be the "risk" that the money would not be re-allocated next year. After all, this is what happens in the private sector, where control of expenditure is a key result area for any person in management.

Looking at the individual items of expenditure, recurrent expenditure is 4.9 percentage points less than estimated, public debt servicing is 4.2 percentage points less than estimated and capital expenditure is 15.3 percentage points less than estimated.

There has been a widening of the gap between estimates and actual expenditure since June on each of these items. Moreover, compared to the first nine months of 2003, there is also an improvement of 3.6 percentage points with regard to recurrent expenditure, 1.8 percentage points with regard to public debt servicing and 20.4 per cent with regard to capital expenditure.

The title of this week's contribution questions whether this is a real trend or not. I believe the question is not a hypothetical one but is very real and very relevant for two main reasons.

First, the public sector deficit cannot be addressed by tackling just one aspect, namely expenditure.

The revenue aspect should also be addressed. In past years the public sector has become more efficient in collecting tax revenues (direct and indirect); however, there is little doubt in people's minds that there is still a large element of tax evasion which should be addressed.

Then there is also the aspect of economic growth, which in turn generates revenues for the government, reduces expenditure on unemployment benefits, as well as reducing the percentage of the fiscal deficit in relation to the gross domestic product.

One appreciates that the government walks on a tight rope as it seeks to address the fiscal deficit. Reducing expenditure and raising revenue may hamper economic growth and so a balance needs to be achieved among these three variables if the indications that we have that the fiscal deficit is being addressed are to develop into a real trend.

The second reason is the volatility of economic trends in the last four years. Just when it was felt that there could be no more international economic slowdowns, we hit quite a severe one, and there are several people who are still not sure whether we are out of it or not. This is because, just when some positive economic trends start to emerge, negative ones rear their head once more, with the result that the economic recovery (if there has been one) did not consolidate itself at all.

This has impacted on the performance of all economies, as short-term trends on any aspect of the economy are not developing into long-term ones. The cause of this is uncertainty and, even though we may achieve a meaningful balance between economic growth, reducing government expenditure and increased government revenue, this uncertainty makes one question whether the improved position of our economy with regard to the fiscal deficit is a long-term trend or just a short-term result with no long lasting effect.