6 - 12 January 2000

Government ordinary revenue increases

by Anthony Manduca

Ordinary revenue during the first 11 months of 1999 amounted to Lm533.4 million, an increase of Lm56.2 million or 11 per cent over the Lm477.2 million received during the same period one year earlier. This is revealed by the report on government finance for the period January-November 1999 published by the Central Office of Statistics.

The main factors that led to this increase included revenue from income tax, where an increase of Lm20.6 million or 21.8 per cent was registered compared to the first 11 months of 1998, and an additional Lm12.8 million collected from both CET and VAT. The additional revenue from income tax is inclusive of Lm13.4 million in arrears collected following direct action with defaulting tax payers. Duty on documents, motor vehicle registration tax and casino charges provided additional revenue of Lm7.2 million or an increase of 13 per cent through licences, taxes and fines.

Furthermore, revenue from social security contributions increased by Lm6.3 million or 5.4 per cent during the first 11 months of this year while profits received from the Central Bank were higher by Lm6.1 million.

The government's borrowing requirements during the period under review were lower by Lm26 million when compared to the same period a year ago.

Total recurrent expenditure during the first 11 months of 1999, excluding public debt servicing, amounted to Lm464.9 million, up by Lm8.2 million or 1.8 per cent, from Lm456.7 million one year earlier. The main reasons for this increase in recurrent expenditure were Lm6 million more in social security benefits, Lm1.9 million in increases in advances to local councils, and Lm3.1 million in increased pension costs paid out by the Treasury.

Public debt servicing costs rose by Lm5.8 million to Lm55.3 million by the end of November 1999, mainly because of payment of interests falling due on the borrowing of Lm110 million in 1998.

Capital expenditure for the first 11 months of the year totalled Lm82.7 million, an increase of Lm7.5 million or 10 per cent over the Lm75.2 million spent one year earlier. This increase reflects the outlays on one-off commitments which will not be repeated this year, such as the drilling for oil in Kercem, Gozo, and other capital projects which were partly financed under the fourth Italian-Maltese Financial Protocol, and which have since been completed.

The year on year increase also reflects the wages and salaries plus terminal benefits paid to Kalaxlokk employees before the restructuring exercise of this company was complete.

Statistics supplied by the Central Bank of Malta show that government debt at the end of November amounted to Lm824.7 million, up from Lm748 million in November of the previous year. Treasury bills and Malta Government Stock accounted for Lm83.5 million or 10.1 per cent and Lm697.2 million or 84.5 per cent respectively. The remaining share of Lm44 million or 5.3 per cent was accounted for by foreign borrowing. At the end of November 1999, government debt was Lm10.6 million less than the debt for the previous month.