Lowest January to May deficit on record

Latest Government Finance Data issued yesterday by the National Statistics Office (NSO) shows that the consolidated fund deficit for the first five months of this year declined by €47.5 million to €71.3 million, thus becoming the lowest January to May deficit since Malta became an EU member.

The decline was fuelled by a significant increase in recurrent revenue of €62.8 million or 4.7 per cent on the back of the robust economic growth being recorded this year. Indeed, tax revenue increased by €128.5 million over the same period of last year. Revenues from income tax recorded the highest increase, rising by €44.8 million year-on-year followed by revenue from social security contributions which increased by €29.7 million. The increases in direct tax revenue reflected the increase in employment growth recorded recently, which in the first quarter of this year was the highest when compared to the other EU member states. Notable increases were recorded in all the other tax revenue components including licenses, taxes and fines, VAT, as well as customs and excise duties.

The net revenue increase was remarkable in spite of a significant fall in EU grants. This non-tax revenue decrease reflects the closure of the European Union financing period 2007-2013 at the end of last year and the start of the 2014-2020 EU funding programme. These reductions would be balanced by lower EU funded capital expenditure. Indeed, capital expenditure for the first five months was €69.1 million lower than the peak of the previous year.

Recurrent expenditure increased by €15.3 million or by 1.0 per cent over last year, which is well within the Budget forecast for the first five months of this year.

Minister for Finance Prof. Edward Scicluna remarked: “It is very comforting to note that even this year, the public finances including the deficit remain on target.”