Ordinary Revenue makes up 54 per cent of original budgeted revenue forecast

Compared to one year earlier, during the first seven months of this year, The National Statistics Office Ordinary Revenue increased by Lm19.0 million, or 5.6 per cent, and amounted to Lm359.8 million.

During the period under review, revenue from Consumption Taxes (VAT) increased by Lm6.0 million or 10.1 per cent. At the same time, revenue from Income Tax and Social Security increased by Lm5.4 million and Lm6.7 million respectively. Revenue from profits on lotteries has this year increased by Lm1.0 million. On the other hand, revenue from Customs and Excise declined by Lm2.8 million or 8.6 per cent.

Total Ordinary Revenue to date makes up 54.0 per cent of this year’s original budgeted revenue forecast. During the January to July period last year, Government was also in receipt of Lm12.0 million by way of proceeds from asset sales, and of Lm6.0 million in the form of grants. During the same period this year, no revenue from asset sales was reported, while the revenue from grants amounted to less than Lm0.5 million.

The shortfall between Ordinary Revenue and Total Expenditure (less contribution to the Sinking Fund in respect of local and foreign loans) during the first seven months of this year amounted to Lm68.9 million; up from a comparable shortfall of Lm61.5 million reported during the same period last year. Although Ordinary Revenue increased by Lm19.0 million, this was more than offset by an increase of Lm26.4 million in Total Expenditure (less contributions to the Sinking Fund which this year amounted to Lm6.2 million compared to Lm6.4 million contributed last year).

When compared to the same period last year, Total Expenditure increased by Lm26.2 million or 6.4 per cent, and amounted to Lm434.9 million. However, Total Expenditure during the first seven months of 2000 and 2001 were both within the 58.3 per cent benchmark when comparing this year’s data with the budgetary estimates, and last year’s data with the actual final outturn. The comparative figures of expenditures are listed hereunder.

As expected, the major increase under Recurrent Expenditure was reported under the Personal Emoluments category. This category increased its expenditure by Lm13.9 million, mainly due to the increase in the salary scales following the new civil service collective agreement, the Lm1.50c per week cost of living adjustment and normal incremental steps in wages and salaries.

A comparative increase of Lm5.5 million or 3.1 per cent was reported under the Programmes and Initiatives category. Although, within this category, last year Government paid a one-off budgetary compensation payment of Lm4.0 million, this year higher expenditures were reported in respect of Treasury Pensions (+Lm3.9 million), the State Grant (+Lm1.8 million), Social Security Benefits (+Lm2.2 million), and Church Schools financing (+Lm1.3 million). On account of this year’s contribution to the University of Malta and the Junior College, the Contribution to Government Entities category is this year reporting a comparative increase of Lm2.0 million.

The above additions to recurrent expenditure were in part offset by a reduction of Lm3.5 million within the Operational and Maintenance Expenses category. This reduction was brought about by less expenditure on materials and supplies at the Health Division as well as on transport costs under certain Recurrent votes as a result of several imprest drivers taking up regular employment with Government.

The interest portion of public debt servicing costs has increased by Lm0.7 million this year, from Lm35.0 million last year to Lm35.7 million during the period under review. This increase was mainly the result of loans borrowed during the second half of 1999 and the resort to Treasury Bills. Government transferred practically the same amount (just over Lm6.0 million) both this year and during the same period last year to sinking funds in respect of foreign and local loans.

Capital expenditure during the period under review increased by Lm7.8 million or 17.1 percent, and amounted to Lm53.3 million. The Malta Tourism Authority has this year utilized Lm1.0 million more than the amount withdrawn during the same period last year. At the same time additional capital outlays of Lm1.5 million and Lm2.2 million were respectively reported in respect of road works and acquisition of property. Mainly due to Malta Freeport debt servicing costs, capital expenditure by the Ministry for Economic Services showed a comparative increase of Lm4.0 million. These increases were in part offset by a decrease of Lm1.2 million in payments on projects related to the Ministry of Education.

Provisional statistics supplied by the Central Bank of Malta show that Government Debt outstanding at the end of July stood at Lm993.8 million; up by Lm96.6 million, or 10.8 per cent, from Lm897.2 million outstanding at the end of July last year.

Treasury Bills and Malta Government stock accounted for Lm188.7 million or 19.0 per cent, and Lm768.2 million or 77.3 per cent respectively. The remaining share of Lm36.9 million or 3.7 per cent was made up of foreign borrowing.

At the end of July, Government debt was Lm68.8 million more when compared with the end of last year. Compared to one month earlier, Government debt was higher by Lm19.6 million.

The amount of Lm434.7 million represents outstanding balances on Government Guaranteed debt. They exclude Multilateral Investment Guarantee Agency (MIGA) and International Bank for Reconstruction and Development (IBRD) positions, as well as Government guarantees on foreign loans taken by the Central Bank on behalf of the Malta Government as these loans already feature in the calculation of Government foreign debt. The aggregate figure of Lm434.7 million is arrived at by adding the amount withdrawn (being an overdraft or loan), with the interest charged during the period under review. If this figure exceeds the limit, the latter is then reported as being the total balance guaranteed by Government. Within this context it is interesting to note that the amount of Government Guaranteed debt has been declining over the last few years. Indeed the June figure is almost Lm35 million lower than the Lm469.7 million guaranteed at the end of last year. The acknowledged data sources in respect of guaranteed debt are the Treasury, the Ministry of Finance and the Central Bank of Malta.

Source: National Office of Statistics