Government 2001 expenditure well below budgetary estimate

According to the National Statistics Office’s long-awaited results of government’s financial performance last year, government’s expenditure was found to be well below its budgetary targets and, in fact, accounted for 94.6 per cent of the estimate.

Total expenditure last year reached Lm766.7 million, an increase of Lm50.4 million, or seven per cent, over the previous year.

Ordinary revenue was recorded at 99.6 per cent of the budgetary forecast while the shortfall between ordinary revenue and total expenditure over the year amounted to Lm85.3 million, an increase of Lm0.1 million over the shortfall of Lm85.2 million reported for 2000.

Over the course of last year, ordinary revenue had amounted to Lm668.6 million, compared with the Lm617.7 million collected over 2000. Ordinary revenue accordingly registered a year on year increase of almost Lm51 million, or 8.3 per cent.

While in 2000 government had received Lm12 million by way of proceeds from the sale of assets and of Lm12.7 million in the form sinking funds of converted loans, last year government received almost Lm22 million by way of sinking funds of converted loans.

In terms of expenditure the personal emoluments category last year’s data showed an increase of Lm24.2 million, 14.2 per cent, and amounted to almost Lm195 million. The increase was the result of improvements in the salary scales following the new civil service collective agreement, the Lm1.50 per week cost of living adjustment and normal incremental steps in wages and salaries.

The increase in ordinary revenues was mainly brought about by a number of considerations.

Higher rates of duty and time variance of duty payments on petroleum products increased the revenue from customs and excise duties by Lm5.7 million or 10.4 per cent. Proceeds from income tax rose by Lm16.8 million, or 11.2 per cent, mainly due to improved efficiency gained under the Provisional Tax and FSS methods of tax collection, as well as due to the effects of the civil service collective agreement.

VAT added Lm10.6 million or 10.2 per cent to the total, revenue from Social Security Contributions increased by Lm17.1 million or 10.5 per cent. Meanwhile, higher employment levels as well as improved wages and salaries, including the civil service collective agreement effects, led to this increase, which also includes the statutory state grant.

The operational and maintenance expenses category last year reduced its outlay by Lm4.7 million compared to the previous year’s outlay for the same period (Lm45.3 million this year as against Lm50 million last year). This reduction was mainly due to less expenditure on transport costs under certain Recurrent votes as a result of imprest drivers taking up regular employment with Government, shifting the expenditure on their remuneration to the Personal Emoluments category. Moreover during 2000 an additional Lm2 million had been expended under the Health Division for arrears payments in respect of drugs and surgical materials.

A comparative increase of Lm23.1 million or 7.7 per cent was reported under the Programmes and Initiatives category (Lm321.6 million in 2001, Lm298.4 million in 2000). This increase was mainly brought about by increased outlays in social security benefits (+Lm8.6 million), social security state grant (Lm5.7 million), Treasury pensions (+Lm6 million), new items under the N.P.A.A. implementation (+Lm3.47 million), and Streets and Roads Lighting (+Lm1 million).

Contributions amounting to Lm16.5 million have been hived off from the Capital Expenditure classification and included in the Contributions to Government Entities recurrent expenditure category. At the same time the contributions required for the operation of the Junior College and the University were increased by Lm3 million during 2001 due to the relative collective agreement. Therefore this category registered a comparative increase of Lm22.1 million. (Lm52 million this year compared to Lm29.9 million last year).

The interest portion of public debt servicing costs had increased by Lm4.2 million or 7.8 per cent, from Lm54.4 million during 2000 to Lm58.7 million during the year under review, mainly on account of the heavy resort to Treasury Bills during 2001, in lieu of privatisation funds, and to a lesser extent, as a result of part of the new local loans issued during the first half of 2001.

The Contribution to Sinking Fund in respect of local and foreign loans this year amounted to Lm11.7 million, marginally less than the Lm12.3 million contributed last year. Direct loan repayments, at Lm1 million, were marginally less than the Lm1.1 million repaid last year.

Other minor differences compared to the previous year include: Lm1.6 million less expended during 2001 under the Education Ministry Vote, mainly on account of the University capital allocation; Lm1 million additional spent in 2001 under the Tourism Ministry Vote in favour of the Malta Tourism Authority capital programme; Lm1 million less expended during 2001 under the Home Affairs Ministry’s various Divisions; and Lm1.9 million provided additionally in 2001 under the Health Ministry Capital Vote mainly for the New Hospital Project.