Updated: Malta deficit expected to widen to 3.7% this year - European Commission Spring Forecast

Malta's deficit in 2013 is expected to widen to 3.7 per cent, according to the European Commission's Spring Forecast. The forecast says that total current primary expenditure is forecast to increase marginally by 0.1 percentage points of GDP, as the increase in intermediate consumption is offset by less dynamic social transfers due to the impact of the 2006 pension reforms. Net capital expenditure, comprising the planned additional equity injection into Air Malta, isexpected to stabilise. The increase in tax revenue, related to the pick-up in economic activity, only partly compensated for the disappearance of the one-off revenues registered in 2012. The forecast says that income taxes are projected to decelerate on the back of measures to gradually reduce the overall income tax burden in 2013-2015. As a result, current revenues areprojected to decline marginally with the deficit reaching 3.6 per cent of GDP in 20134. The dept to GDP ratio is projected to continue to increase over the forecast horizon, as the primary deficit is expected to continue to expand. But a statement referring to the forecast, Finance Minister Edward Scicluna said the government remained committed to keep...