By February Government’s Consolidated Fund had a deficit of under €81 million. This meant an improvement of €247 million from the fiscal results in the same period in 2021.
The first two months of the year marked the best Government financial results observed since 2019. This because in 2020 there was a deficit of €98 million in the first two months in 2020, rising to €328 million in 2021. In the first two months of 2019 the deficit had been of €63 million, despite the year resulting in an overall surplus.
It is worth noting that in the first two months of 2020, the pandemic had not yet arrived in our country, although there were already some economic impacts relating to its influence overseas.
At the beginning of 2020 Malta’s Government had not yet needed to introduce schemes such as the wage supplement, which currently still amount to a substantial investment. Moreover, health spending was much more contained in 2020 compared to now. In fact, this year Government’s overall recurrent expenditure was almost €90 million higher than in the same months of 2020.
This meant an improvement of €247 million from the fiscal results in the same period in 2021.
By contrast revenues were almost €90 million better than in the first months two years ago. This indicates that compared to before the start of the pandemic, economic activity is now overall much greater. For example, income tax revenue was €261 million this year, against €199 million in 2020. Even social security contributions and VAT revenues are far better than they were two years ago.
Comparing revenue with 2021, one notes a very strong improvement, of almost €97 million. In contrast, the Government’s expenditure decreased by €151 million. This confirms how a substantial part of the rise in spending that occurred in 2021 was as a response to the pandemic. For example, overall outlays on health decreased to €133 million from €177 million a year ago. This while outlays remain far higher than they were in 2020, when they amounted to €107 million.
The 75% improvement recorded in the Consolidated Fund balance during the first two months of the year confirms that our economy is rebounding from the effects of the pandemic. As a result, the situation of the public finances is returning to normal. This while Government is still able to continue to provide assistance to those sectors that are still affected by the pandemic while also having enough resources to support other issues such as the impact of the surge in fuel prices as well as impacts arising from the Ukraine war.