Malta registered the third worst budget deficit in the eurozone last year after Ireland and Greece.
At minus 4.7 per cent, the worsening deficit reversed the positive downward trend of recent years, which had reached an all-time low of minus 2.2 per cent in 2007.
However, figures published by Eurostat show that Malta was not alone in experiencing a worsening scenario in public finances.
Nine countries of the 16-member zone saw their deficit deteriorate further in 2008. Another four countries registered surpluses that were lower than those in the previous year.
Five countries, including Malta, registered deficits above the eurozone target of three per cent.
The data was published at the same time that the International Monetary Fund warned of a "deeper" global recession ahead.
Finance Minister Tonio Fenech yesterday admitted that the global economic crisis had a "bigger than expected impact" resulting in lower revenues for the government.
His admission contrasted with the more positive tone he used when delivering the budget in November. At the time he expected a measure of "slippage" in public finances but was confident that the deficit would be contained close to the euro zone's three per cent target.
However, 2008 has turned out to be annus horribilis for public finances, with debt levels also rising by a further two percentage points.
Mr Fenech said that a decline in economic activity resulted in lower than expected revenues from income tax, VAT and social security contributions.
Figures published in the Government Gazette this week confirm that even the government's revised revenue targets for 2008 were off the mark. The actual revenue from income tax was €2.9 million below government's expectation.
Income from social security contributions also registered a decline of €3.4 million.
Income from VAT was at par with projections but substantial drops in revenue were registered in the case of licences, fines and excise taxes. The government collected €9.5 million less from licences and fines and €7.5 million less in excise duties.
Another major setback was income from grants. In November, the government had projected a revised income of €68.6 million. This was already substantially lower than the original target of €116 million.
The figures show that the government only benefitted from €30 million in grants in 2008, €38.4 million below the revised projections.
Labour Party spokesman Charles Mangion criticised the government for "deceiving" the public when presenting the estimates and the revised projections for 2008.
He said Prime Minister Lawrence Gonzi had not only completely failed to achieve his financial targets but also had to revise the estimates made last year.
Dr Mangion said that official statistics confirmed that the government continuously played with figures to deceive the public that the country's finances were stable.
The figures proved what the Central Bank Governor had said in his annual report for last year, that the debt and deficit limited the government from launching an economic stimulus package to promote economic growth, Dr Mangion said.
He said that although the deficit was revised upwards to €200 million the target was still exceeded.
Mr Fenech rebutted the accusations and insisted that safeguarding jobs would remain the government's priority in the prevailing economic climate even if it meant running a higher deficit.
He said the original budget estimates for 2008 had to be revised because of the higher subsidies given to Enemalta to cover the cost of oil and to cover the early retirement schemes for Malta Shipyards employees.
"The variation between the revised figures and the actual accounts is a result of the slower rhythm in the government's revenue because of the extraordinary events that occurred in the last three months of last year," Mr Fenech said.
He insisted the government was less demanding in collecting payments owed to it so as not to disrupt the cash flow of companies and this had an impact on its revenue streams.
ksansone@timesofmalta.com