Issue link: https://maltatoday.uberflip.com/i/885114
maltatoday, TUESDAY, 10 OCTOBER 2017 4 EVER since the Dom Mintoff administration registered a fis- cal surplus in 1981, the country has had to contend with annual deficits. Running a deficit may not be a bad thing if it means more gov- ernment investment to prop up an ailing economy or provide a social safety net in times of need. But decades of annual deficits have left the country with al- most €6 billion in accumulated debt that will have to be paid back. And that is what Finance Minister Edward Scicluna is targeting for next year's budget. In fact, 2018 will be the third year running that Malta will run a fiscal surplus but the first to be announced in the budget. With the surplus slated to be around 0.5% of GDP next year, Scicluna has managed to do what seven of his predecessors failed to achieve. He actually got there in 2016 when better than expected re- sults delivered an €8 million surplus in the consolidated fund, which expanded to €101 million when the extended government figures were taken into account. The same is likely to happen for the 2017 fiscal year even though Scicluna did not budget for a surplus. The latest figures from the National Statistics Office show a surplus of €31 million in the government's consolidated fund for the first eight months of 2017. The difference now is that on budget day Scicluna could pre- sent a fiscal and economic fore- cast based on an expected sur- plus in public finances in 2018. But despite presiding over a surplus budget, Scicluna has tempered the urge to go on a spending spree. The totality of measures announced yesterday will add an additional €35 mil- lion to government expendi- ture, some €10 million more than the expenditure leeway Scicluna gave himself over the past four years. The rest will go to start chip- ping away at the public debt. Malta's current debt ratio when compared to GDP stands at just below the eurozone bench- mark of 60%, hav- ing been cut from the 69% regis- tered at the end of 2013. Economists look at this ra- tio to determine the country's ability to withstand the storm when the economy takes a negative turn. This is called room for manoeuvre, which allows governments to spend more money and run a deficit in times of need. Cutting the debt ratio can be done by paying off debt, grow- ing the economy or doing both at the same time. For the past four years, Malta's strategy has been to grow the economy, which automatically leads to a lower debt ratio. Budget 2018 Malta government deficit and surplus 1981-2017 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 1981 Budgeting for the first surplus in years Lino Spiteri 1981-1982 Wistin Abela 1983-1987 George Bonello Dupuis 1988-1992 John Dalli 1993-1996 Leo Brincat 1997-1998 Edward Scicluna made history yesterday, becoming the first finance minister in almost four decades to announce a fiscal surplus in the budget. KURT SANSONE finds out why this is a momentous occasion 22.2 -18.2 -24.0 -26.0 -24.6 -36.8 -99.1 -12.2 -82.0 -102.8 -105.0 -69.6 -73.8 -131.4 -116.6 -257.3 -298.3 -354.7 -299.6 'Having a low debt burden will allow the country a comfortable cushion to withstand any shocks the economy may suffer'