General Government balance and debt position
The deficit of General Government for 2022 amounted to €981.1 million, an improvement of €194.7 million over the deficit recorded in the previous year. The balance is calculated as the difference between total revenue (€5,913.9 million) and expenditure (€6,894.9 million) of General Government. When comparing 2022 to 2021, total revenue increased by €493.8 million, while total expenditure increased by €299.1 million.
|General Government revenue||€ millions||5,170,795||4,766,405||5,420,086||5,913,858|
|% of GDP||36.4||36.2||36.1||35.1|
|General Government expenditure||€ millions||5,099,660||6,039,087||6,595,807||6,894,921|
|% of GDP||35.9||45.8||44||40.9|
|General Government surplus (+) / deficit (-)||€ millions||71,135||-1,272,682||-1,175,721||-981,063|
|% of GDP||0.5||-9.7||-7.8||-5.8|
|General Government debt||€ millions||5,720,265||6,974,669||8,263,919||9,003,370|
|% of GDP||40.3||52.9||55.1||53.4|
When measured as a percentage of GDP, the General Government balance was equivalent to a deficit of 5.8 per cent, an improvement of 2.0 percentage points when compared to a deficit of 7.8 per cent registered in 2021.
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General Government debt increased by €739.5 million over 2021 and stood at €9,003.4 million. The debt-to-GDP ratio for 2022 was down to 53.4 per cent from 55.1 per cent in 2021 (Table 1).
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In order to arrive at the General Government sector’s negative balance for 2022 of €981.1 million, adjustments were made to the balance of the Government’s Consolidated Fund (NSO news release 054/2023), which registered a deficit of €900.3 million, an improvement of €332.2 million over the deficit recorded in 2021. 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 into consideration the Extra Budgetary Units (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 General Government sector.
The largest negative adjustment was related to Other accounts receivable and payable which amounted to €330.2 million, which includes amongst others the Treasury Department accruals data, the EU Funds neutralisation adjustments and the COVID-19 tax deferrals. Other negative adjustments were the rerouted transactions inside the General Government sector and public-private partnership (PPP) agreements (€13.1 million) and the Treasury Clearance Funds (TCF) in non-financial transactions (€7.1 million).
On the other hand, the main positive adjustments were the time-adjusted cash transactions (€167.9 million) and the surplus recorded by the EBUs of €70.0 million, which reflects a slight decrease of €0.9 million over 2021. Other increases were the new recording for payable tax credits (€24.3 million) and the Local Government aggregated surplus of €7.1 million.
Reporting and updates
On 30 March 2023, Malta submitted the government deficit and debt levels for the years 2019-2022, 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 2022, the balance of the General Government was revised for 2019, 2020 and 2021. In this notification the new rules on tax credits, published by Eurostat in the updated Manual on Government Deficit and Debt (2022 edition), were partly implemented such that two of the most material tax credits were classified as payable tax credits given that they have an indefinite period to be absorbed. A payable tax credit is recorded as expenditure when it is earned by the beneficiary and as revenue when it is used. This revision had a negative impact in 2019 (€5.5 million), 2020 (€18.9 million), 2021 (€6.0 million) and a positive impact in 2022.
Downward revisions were recorded in the Other accounts receivable and payable category for 2019 (€7.5 million), 2020 (€28.8 million) and 2021 (€3.6 million). Furthermore, the availability of the EBUs and Local Government’s audited financial statements impacted all the periods under review, with the main revision recorded in 2021, resulting in an increase in the deficit of €22.3 million.
The downward revision in General Government debt in 2021 by €3.9 million resulted from the availability of more audited accounts for EBUs and Local Government.
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 fiscal balance. A SFA of -1.4 per cent of GDP was recorded in 2022. This suggests that the deficit of 5.8 per cent of GDP increased by more than implied by the change in government debt of 4.4 per cent of GDP. The SFA was mainly the result of decreases in Other accounts receivable and payable (1.9 per cent of GDP) and Other adjustments (0.1 per cent of GDP). These were partly offset by increases in the holdings of Currency and deposits (0.2 per cent of GDP), as well as the holdings of Debt Securities (0.4 per cent of GDP) and Equity and investment fund shares (0.1 per cent of GDP) (Table 4).
The data in this release is presented on an accrual basis, as opposed to the monthly news release on government finances, which reflects the Government’s Consolidated Fund and is presented on a cash basis. This exercise is compiled in accordance with the Manual on Government Deficit and Debt and the European System of Accounts (ESA) 2010 (2023 edition). It covers the General Government sector, which includes the Local Government, Extra Budgetary Units, and Budgetary Central Government. Other government accounts, such as the Treasury Clearance Fund and the Sinking Fund, in addition to the Consolidated Fund, are included. Financial transactions are excluded, and other accrual adjustments are taken into account.
The official EDP notification tables that were transmitted to the EU Commission can be found in the excel tables.
Further data for the Government’s Consolidated Fund can be found online.
More information on the revenue and expenditure categories, as well as the financial assets and liabilities and debt, was published today in the News Release ‘Quarterly Accounts for the General Government Sector: Q4/2022’.
The EDP Consolidated Inventory of Sources and Methods in ESA 2010 is available on the NSO website.