the Parliamentary Standing Committee on Public Accounts, which is chaired by a member of the
Opposition to ensure a more transparent scrutiny of how public finances have been utilised.
As regards Public Debt, the Treasury implements the borrowing plan based on the strategy approved by
Government. Moreover, it prepares debt sustainability analysis to assess the long-term sustainability of
projected public sector borrowing levels. Overall, the Public Debt Management Committee, under the
chairmanship of the Permanent Secretary within the Ministry of Finance, is charged with the policy
making mechanism relating to public debt management issues.
4. Results
4.1. Economic classification of expenditure
After reaching a peak of 47.8 per cent of GDP in 2003, the ratio of total expenditure to GDP followed a
downward trend, declining to 44.9 per cent in 2005 and reaching 43.8 per cent of GDP in 2006. In this
context, it is noteworthy that the expenditure ratio in 2003 was highly influenced by a one-off operation
related to the restructuring of the shipyards. Furthermore, apart from being underpinned by a rise in
economic growth that outweighed the rise in absolute levels of expenditure components, this decline was
also attributable to a decreasing rate of growth of the ‘Other’ component of expenditure. It is noteworthy
that as from 2005, Government has made use of substantial amounts of EU funds that are reflected both
under revenue and expenditure categories, with expenditure including also the element of co-financing
from national funds. Moreover, since 2004, Government expenditure includes an annual contribution of
around Lm23 (€53.6) million towards the EU budget.
The main developments in the main components of General Government expenditure by economic
classification for the 1999-2006 period are presented in Figure 1
Figure 1 - Composition of General Government Total Expenditure
( economic classification)01020304050601999 2000 2001 2002 2003 2004 2005 2006
Collective Consumption Total Social Transfers Interest Expenditure
Subsidies Gross Fixed Capital Formation Other% of GDPCollective consumption, that mainly comprises compensation of employees, fell from 9.3 per cent of
GDP recorded in 1999, to 9.0 per cent in the following year and peaked at 10.0 per cent in 2001,