The latest statistics continued to uncover and confirm the weakness of the government’s financial situation, the Labour Party’s spokesman for finance, Charles Mangion said.

In a reply, the Finance Ministry rebutted the claims and accused the opposition of being cut off from the economic reality.

Dr Mangion said that according to figures published by the National Statistics Office, debt increased by €390 million to nealy €3.9 billion and interest in the first seven months of this year increased by €8.3 million to €116 million.

Deficit till the end of July reached absolute record levels of €370 million.

Dr Mangion said that in the first seven months of this year the government saved €21 million from the water and electricity subsidy since it placed all the burden on the people. But the defict continued to increase - by €85 million over 2008.

Statistics, he said, confirmed that families were feeling the burden with the government receiving €14 million less from VAT when compared to the same period last year.

Dr Mangion said that although capital expenditure was slightly higher than last year, it was still not enough especially at a time of recession.

The ministry said that Eurostat figures showed that most EU countries were experiencing a deficit increase and most would have surpassed the three percent limit established by the EU.

This was a direct result of the economic crisis because of which government shad to invest more to protect and create employment. This was also done in Malta.