Government should explain what led to the shortfall in income streams in such a short period of time, the Nationalist Party said in a statement.
The Opposition has over the past weeks, expressed its concern on the deterioration in the consolidated fund. These concerns were raised when it became clear that government's own targets on the consolidated fund were not being met, the statement, signed by spokesman for finance Mario de Marco, said.
On 22 October 2018 government published the Financial Estimates 2019. On page 2 of this document, government stated that the Consolidated Fund in 2018 would end up with a positive balance of €16,600,000. It now transpired that instead of a positive balance the consolidated find ended up with a deficit of €70 million.
According to the same document, (Table: Abstract of Revenue, page 7), government was budgeting to collect €1,682 million from income tax. Actual income tax receipts in 2018 amounted to €1,573,144,000, a shortfall of €109 million or 6.5%.
Table 1: Income Tax receipts Budget and Actual 2017-2018
|
| Budgeted (€000)* | Actual (€000)** | Difference (€000) |
| 2017 | 1433 | 1497 | 64 |
| 2018 | 1682 | 1573 | (109) |
*Financial Estimates, Ministry of Finance** Government Finance Data, NSO
Grants, which include the re-imbursements from the European Union were also overstated in the budget when compared to actual by around €54 million.
Government should explain what led to the shortfall in these income streams in such a short period of time. The Opposition has every right and duty to ask what led to this reversal of fortunes. The Minister has to date given three different explanations. In his first reaction, he blamed the public service collective agreement, in the second instance he blamed the capital projects. In this latest round, he is blaming the reversal of fortunes on cash flow management.
The Opposition is fully aware that the final position on the country's surplus or deficit can differ once certain adjustments are done, particularly with regards to monies due from the European Union for capital projects part-financed through various programmes. But government should have factored in this discrepancy when presenting its projections in October. Government knew or should have known what monies would be received by the end of the year yet presented to parliament a situation that was off the mark by €80 million.
Sustainability of government's finances
With regards to the sustainability of government finances, the Opposition reaffirms its view, a view shared by the European Commission, that Government is financing its burgeoning recurrent expenditure with one-off revenue streams and income streams that in the short-to-medium turn could dry up or suffer from cuts. The Opposition and the European Commission included in this category of funds-at-risk, funds from the IIP scheme, EU funds and tax funds the latter of which could drop in the eventuality of an economic slowdown.
Moneyval
The comments made by the Finance Minister today in relation to the leaking of the Moneyval report, reaffirms the Opposition's view that in all likelihood the final report will not differ much from the draft report. This means that our country will, come July, be facing the prospect of being blacklisted. Government, rather than owning up for its shortcomings that led to this sorry state of affairs, is already implementing its favourite strategy of shifting the blame onto the Opposition. For the record, the Opposition has immediately denied having seen the draft report or leaking it to the press. That report was only made available to Government.
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