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Malta: General Government Balance and Debt under the Maastricht Treaty: First reporting for 2022

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 In 2021, the General Government registered a deficit of €1,161.7 million, equivalent to 8.0 per cent of GDP. The General Government debt amounted to €8,284.4 million or 57.0 percent of GDP.

General Government balance and debt position

The deficit of the General Government for 2021 amounted to €1,161.7 million, an improvement of €76.0 million over the deficit recorded in the previous year. The balance is calculated as the difference between total revenue (€5,453.3 million) and expenditure (€6,614.9 million) of the General Government. When comparing 2021 to 2020, total revenue increased by €639.9 million, while total expenditure increased by €563.9 million. The fiscal results for 2021 were again impacted by the COVID-19 pandemic and subsequent government measures to mitigate the economic, social and health risks associated with the pandemic.

When measured as a percentage of GDP, the General Government balance was equivalent to a deficit of 8.0 per cent, an improvement of 1.5 percentage points when compared to the deficit of 9.5 percent that was registered in 2020.

General Government debt increased by €1,305.9 million over 2020 and stood at €8,284.4 million. The debt-to-GDP ratio for 2021 rose to 57.0 per cent, from 53.4 per cent in 2020


2021 data

In order to arrive at the General Government sector’s negative balance for 2021 of €1,161.7 million, adjustments were made to the balance of the Government’s Consolidated Fund (NSO news release 053/2022), which registered a deficit of €1,242.2 million, an improvement of €227.6 million over the deficit recorded in 2020. The adjustments are necessary to shift from the Government’s Consolidated Fund into an accruals-based exercise compiled in line with the established methodology. The adjustments also take in consideration the Extra Budgetary Units1 (EBUs), which are classified within the General Government sector, as well as the Local Government sector. Table 3 provides the transition from the Consolidated Fund to the General Government sector.

The largest notable positive adjustment is the surplus recorded by the EBUs of €50.6 million, a decrease of €8.5 million over 2020. This was followed by time-adjusted cash transactions (€50.5 million) and the Treasury Clearance Funds (TCF) in non-financial transactions (€15.3 million). Other accounts receivable and payable amounted to €0.3 million, which included the Treasury Department accruals data, the EU Funds neutralisation adjustments and the COVID-19 tax deferrals.

In contrast, the main negative adjustments were related to standardised guarantees (€17.4 million), reflecting the expected called amount of the COVID-19 guarantee scheme, as well as rerouted transactions inside the General Government sector and public-private partnership (PPP) agreements (€11.8 million). Other negative adjustments include the difference between interest paid and accrued (€9.0 million) and other financial transactions (€8.9 million).


Reporting and updates

On 30 March 2022, Malta submitted the government deficit and debt levels for the years 2018-2021, as part of the Excessive Deficit Procedure (EDP) Notification. This was done in accordance with Council Regulation (EC) No. 479/2009, as amended by Commission Regulation (EU) No. 220/2014.

When compared to the previous submission of 30 September 2021, the balance of the General Government was revised for all years under review. The surpluses recorded in 2018 and 2019 were revised upwards by €25.1 million and €17.9 million, respectively. These revisions were primarily attributable to the classification of the Planning Authority’s Environment and Development funds inside the General Government sector from 1997 onwards, along with the availability of more audited accounts for EBUs and local councils.

The fiscal balance for 2020 was also revised upwards by €30.2 million, reflecting an upward revision of €44.3 million in the Other accounts receivable and payable category, mainly linked to the reimbursement of the Wage Supplement scheme through the EU REACT funds. Other revisions were noted in tax deferral dues, as well as a downward revision of €18.0 million resulting from wider availability of EBUs’ and local councils’ audited financial statements. Concurrently, the classification of the Environment and Development funds explains €13.1 million of the aggregate upward revision in the fiscal balance recorded in 2020.

The main revisions in General Government debt reflect the availability of more audited accounts for EBUs and local councils. Figures were revised upwards by €1.7 million for both 2018 and 2019. Similarly, an upward revision of €1.0 million was noted for 2020.


Stock-Flow Adjustment (SFA)

The SFA, also referred to as the deficit-debt adjustment, captures those transactions or factors that influence government debt but are not reflected in the government balance. A SFA of 1.0 per cent of GDP was recorded in 2021. This suggests that the debt increased by more than implied by the annual deficit of 8.0 percent of GDP. The SFA was mainly the result of increases in the holdings of Currency and deposits (0.6 percent of GDP), as well as the holdings of Equity and investment fund shares (0.4 percent of GDP), Other accounts receivable and payable (0.4 percent of GDP) and Loans (0.3 percent of GDP). These were partially offset by decreases in Other adjustments (0.5 per cent of GDP).







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