Government registers €312 million deficit in first quarter
During the first quarter of 2020, the Government’s Consolidated Fund reported a deficit of €312.5 million, the NSO said today.
Between January and March 2020, recurrent revenue fell by €88.9 million and totalled €925.6 million. This reflected an 8.8 per cent decline from the €1,014.5 million reported in revenue by the end of the first quarter of 2019.
The main drops in revenue were reported under Grants (€25.6 million) and Income Tax (€24.4 million). Lower revenue was also witnessed under Customs and Excise Duties (€14.3 million), Value Added Tax (€8.5 million), Licences, Taxes and Fines (€7.2 million), Fees of Office (€5.1 million), Social Security (€4.8 million) and Reimbursements (€2.9 million).
Conversely, added revenue was registered under Miscellaneous Receipts (€3.0 million), Dividends on Investment and Rents (both €0.5 million). By the end of March 2020, total expenditure amounted to €1,238.1 million, a 7.8 per cent increase from the same quarter in 2019.
Recurrent expenditure stood at €1,035.3 million, representing a €42.2 million increase from the €993.1 million recorded by the end of March 2019. The main contributor to this increase was a €28.2 million rise reported under Contributions to Government Entities. Furthermore, rises in outlay were also registered by Programmes and Initiatives (€20.6 million) and Personal Emoluments (€2.4 million), while Operational and Maintenance Expenses declined by €8.9 million.
The main developments in the Programmes and Initiatives category involved added outlays towards the public service obligation for public transport (€14.2 million), social security benefits (€13.4 million) and the extension of the school transport network (€7.0 million). These increases were partially offset by reported drops in social security state contribution (€6.8 million, also reported as revenue) as well as medicines and surgical materials (€5.3 million).
The interest component of the public debt servicing costs totalled €45.7 million, €4.0 million lower than the same period in 2019. In January-March 2020, Government’s capital spending amounted to €157.2 million, an increase of €51.2 million over the first quarter of 2019. The rise was largely due to additional spending towards investment incentives (€40.2 million) which amounted to €58.0 million, including €50.0 million spent in relation to COVID-19 Business Assistance.
Other increases were reported in road construction and improvements (€16.5 million), property, plant and equipment (€7.4 million), the EU agricultural fund for rural development 2014-2020 (€3.6 million) and the electricity distribution centre at Ricasoli (Smart City) (€2.5 million). On the other hand, there were drops reported under the EU internal security fund – borders and visa (€14.5 million) and structural funds 2014-2020 (€4.7 million).
The difference between total revenue and expenditure resulted in a deficit of €312.5 million being reported in the Government’s Consolidated Fund by the end of March 2020. This represented an increase in the deficit of €178.3 million when compared to that of €134.2 million witnessed during the same quarter in 2019. The main driver of the difference was an increase in total expenditure, consisting of recurrent expenditure (€42.2 million), interest (-€4.0 million) and capital expenditure (€51.2 million), in conjunction with a drop in recurrent revenue (€88.9 million).
Decreases in revenue and increases in expenditure reflect developments related to COVID-19. By the end of March 2020, Central Government Debt stood at €5,550.3 million, a €47.8 million rise from March 2019. This was primarily the result of an €86.2 million increase exhibited under Treasury Bills, in addition to a rise in Euro coins issued in the name of the Treasury (€5.0 million). In contrast, there were drops in debt registered under Malta Government Stocks (€22.6 million), the 62+ Malta Government Savings Bond (€2.8 million) and Foreign Loans (€0.1 million). Higher holdings by government funds in Malta Government Stocks also resulted in a decrease in debt of €17.9 million.