BUDGET 2008 | Tuesday, 16 October 2007

GDP to reach 4 per cent in 2008

Charlot Zahra

The Budget presented by Prime Minister Lawrence Gonzi yesterday has three stated aims: continuing reducing deficit with a further Lm20 million (the final aim being that of achieving a budget surplus in 2010); continuing investing in the country so that wealth can be created in the future (Lm140 million) and convert part of the country’s economic success into measures that will benefit Maltese and Gozitan families to the tune of Lm21 million.
The country’s Gross Domestic Product (GDP) grew by 3.6 per cent in the end of June this year as against a growth of 3.2 per cent in the same period last year, and is expected to reach 4 per cent by the end of this year.
During the first seven months of this year, total importation went down by 3 per cent over the same period last year, while total exports went up by 6 per cent over the same period last year. The lower imports figure has been attributed to less importation of materials and equipment related to the Mater Dei Hospital.
Earnings from tourism for the first eight months of the year grew by 7.1 per cent to Lm101.5 million from 101.5 million in the same period last year. Tourist departures between January and August 2007 grew by 7.6 per cent to 825,874 from 767,836 in the same period last year, while cruise liner passengers grew by 26.6 per cent to 295,220 from 233,265 from the same period last year.
The gainfully employed workforce as at the end of June grew from 139,480 last year to 140,067 this year, the highest amount ever.
During the first six months of this year, Foreign Direct Investment declined from Lm425.2 million in 2006 to Lm117.8 million in 2007, but one has to consider that the 2006 figures is higher because it includes one-off sale of Maltacom.
The revised deficit figures for this year is Lm48 million or 2.11 per cent of the GDP, as against Lm54 million or 2.37 per cent of the GDP originally forecast. The deficit figure for last year was Lm58 million or 2.68 per cent of GDP.
The Lm48 million figure is net of Lm3 million of revenue from the Investment Registration Scheme, which as a one-off scheme is not included in the calculation of the deficit in terms of the convergence criteria.
During this year government earned Lm 31.2 million more than last year on Income Tax, Lm13.6 million more on Social Security, Lm10.1 million more on licences and other taxes, Lm 7 million more on VAT. On the other hand, Government will be earning Lm35.7 million less from other sources of income, mainly as a result of less receipts from EU funds.
During 2007 the government spent Lm3.6 million more than last year on personal emoluments, Lm1.3 million more than last year on operations and maintenance costs, Lm31.6 million more on programmes and initiatives, Lm6.5 million less on Government entities, and Lm318,000 less on payment of interests.