A shrinking deficit

Consolidated Fund data shows Malta's second-strongest financial performance on record for the first five months of the year.

With a deficit of €7 million in the first five months of the year, this marks the second-best performance on record for Government finances for this period.

For comparison, the only better year was 2017, when the deficit reached just €3 million for the same timeframe. That year ended with a surplus overall.

On the other hand, things haven’t always been this good. In 2012, the deficit for the first five months was a much higher €234 million. Even worse, in 2009, the deficit during this period ballooned to a staggering €294 million.

This year’s deficit of €7 million for the first five months is a significant €97 million better than the €104 million deficit recorded in the same period of 2023. This positive change is even more impressive because it surpasses what was predicted in the Budget. The reason? Government revenue is growing at a much faster pace than spending.

In fact, government revenue grew by a record €447 million or more than 18%. Most of the increase was due to higher income from income tax, social security contributions, and VAT. This reflected the sustained economic growth of the Maltese economy.

Government expenditure grew by less than the increase in revenue, or by €350 million. More than one third of this increase was due to improvements in social benefits, including pensions and children’s allowance. There has also been an increase in wages, due to the coming into force of a number of new collective agreements.

Due to the positive public finances between February and May, central government debt decreased by almost €60 million.

Photo: Shutterstock

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