Deficit is ‘far worse’ than CM’s analysis, GSD says

The GSD has questioned the financial information revealed by the Gibraltar Government this week, insisting that the situation with borrowing is bleaker than the one put forward by No.6 Convent Place.

It was responding after Chief Minister Fabian Picardo said the deficit for the last financial year would be £55.3m and that net borrowing had increased to £652m after cash reserves “just shy” of £120m.

Using that information and details of the latest accounts of the Covid-19 Response Fund, the GSD said it had arrived at “a very different analysis” of Gibraltar’s financial performance for 2021/22.

The latest accounts of the Covid-19 Response Fund show spending of just over £135m in the period from April 1, 2021, to March 31, 2022.

This represents about double the Government’s forecast of £67.5m for the 2021/22 financial year at the time of the last budget, largely the result of lacklustre recovery in key areas such as tourism and import duties, alongside the need for ramped up testing in response to new Covid variants.

Prior to this 12-month period, the Covid-19 fund had previously incurred costs of just over £227m for the financial year ending March 31, 2021, meaning a total cost since the start of the pandemic of £362m.

“First of all let us consider the Chief Minister’s statement that the Budget deficit for 2021/22 is £55m versus last year’s estimate of £51m,” said Roy Clinton, the GSD’s Shadow Finance Minister.

“This begs the question as to whether Sir Joe Bossano’s warning of a potential additional £40 million overspend was wrong?”

“The answer is to be found in the Covid-19 Response Fund movements to March 21, 2022, that clearly shows it exceeded its 2021/22 budget by £67.5 million in supporting Government revenue and expenditure.”

“The Chief Minister gave the figure of net borrowing of £652 million after cash reserves of £120 million, implying an aggregate debt of £772 million at March 31, 2022.”

“The estimated aggregate debt for 2021/22 at March 31 2022 was £722 million, which already included provision for £50 million new borrowing.”

“This means that the Government has had to borrow an additional £50 million - to £772 million - taking total new borrowing in 2021/22 to £100m.”

“This unbudgeted extra borrowing of £50 million is a number the Chief Minister has conveniently failed to highlight in his own press release and shows that the financial picture is far from that he is trying to pretend.”

“The truer picture of the real deficit is in fact far worse than Sir Joe Bossano predicted when you consider the Covid-19 overspend of £67.5 million.”

“Sir Joe of course was correct in pointing out that any budget overspend would have to be met by more borrowing.”

“This is the stark reality of the financial position Gibraltar is in and I look forward to being able to debate this and the estimates for 2022/23 more fully in the forthcoming budget debate.”