Government debt sees €100m month-on-month increase as deficit for 2022 so far tops half a billion

The strong recovery registered in many sectors of the Maltese economy this year has boosted Government revenues, though efforts to limit economic hardship caused by steep increases in the international price of many goods, especially fuels, mean that the public deficit continues to grow.

Central Government debt increased by €100 million in July, and now stands at €8.56 billion.

This comes despite a 14.7 per cent increase in the state’s recurrent revenues in the first seven months of the year, which rose to €3 billion from the €2.6 billion recorded a year prior.

Increases in VAT (€130 million), income tax (€120 million) and social security (€74 million) collections were the largest contributors to the strong revenue growth – all of which are directly dependent on economic performance.

Total expenditure between January and July of 2022 meanwhile grew by only 0.6 per cent over the same period of 2021.

The main contributor to this increase was a €41.9 million increase reported under programmes and initiatives. Increases were also witnessed under personal emoluments (€10.4 million) and contributions to Government entities (€8.6 million).

This rise in expenditure outweighed a decrease under operational and maintenance Expenses (€24.4 million).

The main developments in the programmes and initiatives category involved added outlays towards economic stimulus payments (€48.2 million), social security benefits (€33.7 million), energy support measures (€30.3 million), tax relief measures (€25.9 million), gas stabilisation fund (€7.6 million), residential care in private homes (€7.4 million), child care for all (€6.3 million), and extension of school transport network (€6.0 million).

This rise in programmes and initiatives was partly offset by a decrease under the pandemic assistance schemes (€123.9 million).

The interest component of the public debt servicing costs totalled €100.8 million, a decrease of €2.7 million when compared to the previous year.

By the end of July 2022, Government’s capital spending amounted to €315.4 million, €13.2 million lower than 2021.

This decrease was partially offset by increases under investment incentives (€12.7 million), film industry incentives (€8.6 million) and payments related to home ownership scheme (€2.7 million).

The difference between total revenue and expenditure resulted in a deficit of €514.9 million being reported in the Government’s Consolidated Fund at the end of July 2022.

Compared to the same period in 2021, there was a decrease in deficit of €366.2 million. This difference mirrors an increase in total Recurrent Revenue (€386.8 million), partly offset by a rise in total expenditure, which consists of Recurrent Expenditure (€36.5 million), Interest (-€2.7 million) and Capital Expenditure (-€13.2 million).

At the end of July 2022, Central Government debt stood at €8,557.8 million, an increase of €709.4 million from 2021.

The increase reported under Malta Government Stocks (€569.0 million) was the main contributor to the rise in debt.

Higher debt was also reported under Treasury Bills (€96.3 million), the 62+ Malta Government Savings Bond (€93.8 million) and Euro coins issued in the name of the Treasury (€4.9 million). This increase in debt was partially offset by a decrease in Foreign Loans (€0.1 million). Finally, higher holdings by Government funds in Malta Government Stocks resulted in a decrease in debt of €54.5 million.