Government spent €1 billion more than estimated in 2021

The government has spent €1 billion more than it budgeted for this year, increasing the country’s debt and deficit levels to a new record high.

In a quick move last Tuesday, during the last parliamentary session of the year before the Christmas recess, Finance Minister Clyde Caruana moved a supplementary estimates bill for 2021, to enable the government to appropriate an extra €1.08 billion already spent this year.

The Bill was approved with the Opposition voting against it.

An analysis of the Bill by The Shift shows that the government has slipped in various multi-million euro payments that had not been included, or even mentioned, in its previous budget estimates.

These include a payment by the Health Ministry, headed by Chris Fearne, which according to the supplementary estimates has now paid Steward Health Care an extra €40 million (increased from €20 million) for this year, over and above the €50 million it had already committed to paying.

That’s €90 million for Steward Health Care in a year allocated through an agreement signed by the government that states that whatever the government budgets for the running of these hospitals, the funds go straight into Steward Health Care’s coffers – regardless of whether they actually spend it on the hospitals.

So far, the government has not explained why it paid Steward Health Care almost twice the amount it voted for in the 2021 Budget at a time when Steward Health Care is itself arguing the deal was “fraudulent” and “corrupt”.

The appropriation of an extra €40 million for Steward Health Care came on the same day of the publication of a second NAO report, slamming the €4 billion 30-year deal which the Labour government secretly negotiated.

Unfettered spending

The appropriation of an extra €1 billion to pay the 2021 bills is continuing to raise concerns among financial experts that the government has lost control over the management of the country’s finances.

This is even more concerning as most of the €1 billion extra spent this year is related to recurrent expenditure, which includes wages, salaries and overtime, and isn’t related to capital costs.

According to the supplementary estimates, €916 million extra were needed this year to support ministerial commitments, mainly to sustain daily needs.

The biggest increase was spent by the energy ministry, headed by Miriam Dalli, which spent almost €500 million more than it was originally allocated.

According to the supplementary estimates, €277 million extra were required to support schemes during the pandemic, which have now extended well beyond their original projections.

Another €180 million was needed to plug an ever-increasing financial hole due to energy support measures related to increasing prices in fuel and other energy products.

Other unplanned bills which form part of the extra €1 billion include €8 million for a new embassy in New York, a further million in subsidies for public transport, €62 million more spent by Minister Ian Borg on roads and an additional €15 million on a new park in Ta Qali, €26 million by Economy Minister Silvio Schembri on unspecified contractual commitments and almost €10 million more than budgeted on the building of a new swimming pool in Gozo, which is still unfinished.

New record set

According to the latest NSO statistics on government finances, which cover the first 10 months of 2021 (January to October), Malta set new highs for both deficit and debt increases.

Compared to the same period in 2020, Malta had already registered an annual deficit of over €1 billion by October, more than twice the figure originally planned.

This has had a knock-on effect on general debt, which by October had reached €7.9 billion, an increase of €1.4 billion in just 12 months.

By the end of this year, Malta’s debt level is expected to rise significantly above the €8 billion mark, registering an all-time high.