Recenty released data show that, during the first nine months of 2023, the deficit had halved when compared with the same months of 2022. In fact, between January and September 2023 the deficit amounted to €296 million, as against €633 million in the same period in 2022. The fiscal result for 2023 was the best since 2019.
Moreover, the results up to September compare very well with the estimate made by the Minister for Finance during the Budget speech. Last October, Minister Clyde Caruana argued that the deficit would be €936 million. For this to happen, one would need a deficit of €640 million during the last three months of the year, the deficit in the fourth quarter of 2022 having been €349 million. This means that, while in the first nine months the deficit was half that of the previous year, in the last quarter it would be twice that of 2022. In all likelihood, it appears that the fiscal targets will not just be met, but are likely to be exceeded.
The reason for this better-than-expected fiscal performance lies mainly in higher tax receipts. However, the growth rate of spending is also very controlled. Still, Government is carrying out an extensive programme of support to keep energy prices stable, while at the same time investing a record amount on both capital projects and social benefits.
It appears that strong economic growth is boosting Government revenue greatly and is helping to finance this extraordinary investment. At the same time, it is also evident that Government is managing to prioritise its spending, as the amount of record energy support spending and the boost in capital and social spending is not resulting in a high rate of growth in overall expenditure.