Government revenue, expenditure shortfall up 17%

- Gov’t debt up 14%

As expected, the shortfall between government revenue and expenditure saw an increase of Lm14.6 million, or 17.4 per cent, between January and October this year. The shortfall for the first 10 months of this year - deducting the contribution to the Sinking Fund for local and foreign loans as well as direct repayment of loans – stood at Lm83.5 million, while the shortfall over the same period last year had stood at Lm68.9 million.

Revenue
The national Statistics Office reports that Ordinary Revenue made up 78.9 per cent of this year’s budget forecast and this year increased by Lm32.6 million, 6.6 per cent - reaching Lm525.7 million. This compares with the Ordinary Revenue collected during this period last year made up 81.1 per cent of the actual total ordinary revenue for the whole year.
It must also be noted that for the January-October 2000 period the government had also received Lm12 million through proceeds from asset sales and Lm6 million in the form of grants. This year the government is in receipt of Lm0.8 million in the form of grants from the EU.
VAT
Over the first 10 months of this year, revenue from Consumption Taxes (VAT) increased by Lm8.1 million or 9.3 per cent, and collections under the Social Security Contributions went up by Lm9.4 million or 7.5 per cent. In the period under review receipts from Income Tax exceeded those for the same period last year by Lm9.6 million or 8.1 per cent. At the same time, the Duty on Documents Item of Revenue yielded an additional Lm2.0 million. On the other hand no increases have been reported this year under Customs and Excise, mainly due to a time-lag payment by Enemalta Corporation.

Expenditure
Total expenditure over the first ten months of this year amounted to Lm616.4 million, an increase of Lm46.8 million, or 8.2 per cent, over the Lm569.6 million that had been expended last year.
Total expenditure to date made up 80.3 per cent of the budget estimate for this year, compared to a 79.5 per cent share of the actual final outturn last year. The comparative figures of expenditures are listed hereunder.

Recurrent expenditure
The major increase under Recurrent Expenditure was reported under the Personal Emoluments category. This category increased its expenditure by Lm20.2 million, or 14.3 per cent. This increase is the result of improvements in the salary scales following the new civil service collective agreement, the Lm1.50c per week cost of living adjustment, as well as the normal incremental steps in wages and salaries, and the impact of wages to former drivers. However, both last year’s expenditure and this year’s outlay for the period under review represent 83 per cent, the former of last year’s final out turn, and the latter of this year’s budgeted figure.

Operations and maintenance
The Operational and Maintenance Expenses category has this year reduced its outlay by Lm2.5 million compared to last year’s outlay for the same period (Lm35.7 million this year as against Lm38.1 million last year). 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 imprest drivers taking up regular employment with Government, thereby shifting the expenditure on their remuneration to the Personal Emoluments category.

Programmes and initiatives
A comparative increase of Lm14.9 million or 6.1 per cent was reported under the Programmes and Initiatives category (Lm258.0 million in 2001, Lm243.1 million in 2000). Although within this category, last year Government paid a one-off budgetary compensation payment of Lm4.0 million, this year excess expenditures were reported in respect of Treasury Pensions (+Lm5.5 million), the State Grant (+Lm2.9 million), Social Security Benefits (+Lm4.5 million), and Church Schools financing (+Lm1.9 million).

Government entities
On account of this year’s contributions to the University of Malta and the Junior College, the Contribution to Government Entities category this year registered a comparative increase of Lm4.6 million, or 18.3 per cent (Lm29.7 million this year compared to Lm25.1 million last year).

Public debt servicing
The interest portion of public debt servicing costs increased by Lm3.3 million or 7.2 per cent, from Lm46.2 million during the first ten months of 2000 to Lm49.6 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. The Contribution to Sinking Fund in respect of local and foreign loans this year amounted to Lm6.2 million, a marginal decrease from the Lm6.4 million contributed during the same period last year.

Capital expenditure
Capital expenditure during the period under review increased by Lm6.4 million or 9.5 per cent, and amounted to Lm74.1 million. While Lm1.8 million more has been spent this year on road works, an additional Lm2.7 million has been incurred this year over the amount spent last year under the Ministry for Economic Services (mainly by way of public entities’ debt servicing costs). At the same time an additional capital outlay of Lm2.8 million was reported in respect of expenditure on the New Hospital Project.

Government debt
Provisional statistics supplied by the Central Bank of Malta report that Government Debt outstanding at the end of October stood at Lm1,021.4 million; up by Lm124.9 million, or 13.9 per cent, from Lm896.5 million outstanding at the end of October last year.

Treasury Bills and Malta Government stock accounted for Lm194.9 million or 19.1 per cent, and Lm791.7 million or 77.5 per cent respectively. The remaining share of Lm34.9 million or 3.4 per cent was made up of foreign borrowing. At the end of October, Government debt was Lm96.5 million more when compared with the end of last year. Compared to one month earlier, Government debt was higher by Lm18.2 million.

The latest available data on the Government Guaranteed Debt shows an amount of Lm421.4 million representing outstanding balances on the debt guaranteed by government as at the end of September this year. This amount excludes MIGA and IBRD positions and government guarantees on foreign loans taken by the Central Bank on behalf of the Malta Government. These loans already feature in the calculation of government foreign debt. The aggregate figure of Lm421.4 million was arrived at by adding the amount withdrawn (whether overdraft or loan), to the interest charged during the period in question. If this figure exceeds the limit, the latter is then reported as being the total balance guaranteed by Government.

The guaranteed debt has continued with its declining trend. In fact, the figure of Lm421.4 million is Lm13.3 million lower than the Lm434.7 million guaranteed at the end of June, and Lm48.3 lower than the Lm469.7 million guaranteed at the end of last year.