Government finances first half 2002

Compared to the first half of 2001, ordinary revenue during the first six months of this year increased by Lm10.5 million, or 3.4 per cent and amounted to Lm318.6 million, according to statistics released by the National Statistics Office yesterday.

Ordinary revenue made up 43.3 per cent of this year’s budget forecast. At the same time, total expenditure amounted to Lm402.7 million, an increase of Lm34.0 million, or 9.2 per cent, over the Lm368.7 million expended during the January to June period last year.

The shortfall between ordinary revenue and total expenditure (less contribution to the Sinking Fund in respect of local and foreign loans as well as less direct repayment of loans) during the period under review this year amounted to Lm78.5 million, up from a shortfall of Lm53.9 million for the same period last year.

The increase in ordinary (or recurrent) revenue during the period under review was mainly due to higher income of Lm7.5 million recorded under the Licences, Taxes and Fines head of revenue, and was made up of receipts from oil rental fees and duty on documents, as well as receipts previously shown under the Lotteries head of revenue.

At the same time an increase of Lm5.0 million over the amount received last year has been recorded under Fees of Office, mainly through proceeds from the Foreign Investment Scheme registration tax. An increase of Lm2.2 million was also recorded under Customs and Excise duties, mainly through excise revenues from machine-made cigarettes and petroleum.

Income tax and Consumption tax this year increased by Lm2.3 million and Lm0.7 million respectively, while revenue from social security contributions declined by Lm0.5 million, or 0.7 per cent.

Recurrent expenditure, excluding Public Debt Servicing, during the first half of the year amounted to Lm315.6 million, an increase of Lm29.3 million or 10.3 per cent over the Lm286.3 million expended last year. Total expenditure for the period under review makes up 48.0 per cent of this year’s budgetary estimates, up from 46.6 per cent of the actual final out turn for last year.

As far as the Operational and Maintenance Expenses for both periods are concerned, last year’s outlay of Lm21.6 million accounted for 47.7 per cent of the final out turn, while this year’s expenditure of Lm26.1 million accounts for 57.8 per cent of the budget figure. This increase is due to (a) higher settlement of utility bills (Lm3.0 million this year against last year’s Lm2.5 million), and (b) expenditure on the health division’s medical and surgical materials (Lm8.7 million this year compared to Lm6.0 million during the same period last year).

The outlay in respect of Special Expenditure, at Lm0.26 million represented an increase of Lm0.02 over the expenditure last year (Lm0.24 million).

The expenditure incurred on the Programmes and Initiatives category last year amounted to Lm151.4 million and stood at 47.1 per cent of the final out turn (Lm321.6 million). This year’s outlay of Lm158.7 million represents 46.5 per cent of this year’s budget estimates. The increase, in absolute terms, of Lm7.3 million this year mainly represents an increase in Treasury pension payments (+Lm0.9 million), social security benefits (+Lm3.0 million), and NPAA-related activities, mainly those undertaken by the Education Ministry. The latter element was last year implemented later on during the year.

The outlay on the Contributions to Government Entities category this year amounted to Lm32.6 million, an increase of Lm16.3 million over the Lm16.2 million expended last year. This increase includes more than Lm13.0 million which during 2001 were accounted under Capital Expenditure as operational and debt servicing costs of entities like Malta Drydocks, Freeport and MGI/MIMCOL. Furthermore, expenditure in respect of entities like the Malta Statistics Authority, and the Roads and Licensing and Testing Directorates, which this year is accounted under this category, was last year featuring in the form of a normal vote. The Contributions to Government Entities last year accounted for 31.2 per cent of the final out turn (Lm52.0 million), compared to 45.0 per cent spent during the same period this year when compared to the budgeted figure (Lm72.4 million). Last year, the reclassification of expenditure items of a recurrent nature from the Capital to Recurrent vote was effected en bloc at the end of the year.

The interest portion of public debt-servicing costs has this year increased by Lm3.6 million or 12.4 per cent, and amounted to Lm32.9 million. This increase was mainly the result of loans borrowed during 2001 and more use of Treasury Bills this year than last year.

As far as the capital budget is concerned, this year’s outlay amounted to Lm48.6 million, an increase of Lm2.1 million, or 4.5 per cent, compared to the first half of last year. This comparative increase was due to higher contributions to the Malta Tourism Authority (+Lm2.0 million), expenditure related to sundry roads projects (Lm1.0 million), on the New Hospital Project (+Lm6.5 million), the school building programme (+Lm1.0 million), and the Shipyards' early retirement schemes (Lm5.8 million). On the other hand, this year capital expenditure excludes Lm13.0 million representing outlays in respect of entities, which last year featured under Capital Expenditure, and this year are being reported under Recurrent Expenditure.

Provisional statistics supplied by the Central Bank of Malta report that Government Debt outstanding at the end of June stood at Lm1,049.6 million, up by Lm75.5 million, or 7.8 per cent, from Lm974.2 million outstanding at the end of June last year. Treasury Bills and Malta Government stock accounted for Lm198.9 million or 19.0 per cent, and Lm812.9 million or 77.4 per cent respectively. The remaining share of Lm37.9 million or 3.6 per cent was made up of foreign borrowing. At the end of June, Government debt was Lm37.0 million more when compared with the end of last year. Compared to one month earlier, Government debt declined marginally by Lm0.6 million.