Govt forecasts £138m deficit after Covid pandemic

The Gibraltar Government yesterday published the Appropriation Bill for 2021 which will see the Chief Minister Fabian Picardo ask MPs to vote for an estimated consolidated fund expenditure of £665m and capital expenditure of £68m as the Rock emerges from the Covid-19 public health emergency.

The forecast estimated a Government deficit of £138m this past year against the backdrop of the Covid-19 pandemic.

But despite this, Mr Picardo reassured Parliament that “no hardship will be suffered,” adding that no austerity will be imposed but “no abuses will be tolerated either.”

Parliamentarians have already received the Draft Estimates of Expenditure that will be debated during the Budget Session in July.

Mr Picardo said he would not usually say anything further at this stage, but nonetheless added: “This year is an exceptional year.”

“Covid did not just come to Gibraltar,” he told Parliament.

“The pandemic did not just happen to us.”

“And the public finances of every nation on the planet are in a deplorable state as a result.”

“Because the public finances of every nation have been decimated by the Covid pandemic.”

Mr Picardo said that, for Gibraltar, the pandemic had coincided with the run up of a potential hard Brexit.

Despite a deficit of £138m, Mr Picardo told the House the Government will be able to deliver a deficit of £51m the following year if it meets the spending and revenue targets it is predicting.

The Gibraltar Government has secured the necessary borrowing at low interest rates that enables it to continue to provide services, ensure all salaries and pension commitments are fully provided and paid for, Mr Picardo said.

“We are and we will continue to pay our way,” Mr Picardo said.

“So, Mr Speaker, we know what Covid has been.”

“We have not just paid for ventilators and for medicines.”

“We have not just paid for PPE and other equipment.”

“Every single detail of Covid spending is provided for in the published details of the Covid fund.”

“We have also paid for the salary of every single civil servant and public servant without deduction in this period – even when they were not working.”

“And we have paid for the salary of every person in the private sector who was not permitted to work under the Covid Regulations.”

“And so a deficit was the obvious result that every person should have expected was coming.”

“I now confirm it, as will be the case in every other major economy in the world.”

“Finally, Mr Speaker, I should just set out that our objective is to be back in the black in the next 24 months.”

“We have grown this economy before, I have full confidence that we will reverse this deficit.”

Estimated numbers were not disclosed at this stage.

Mr Picardo said representatives from Gibraltar also met with the members for the International Agreement on Taxation and the Protection of Financial Interests.

The liaison bodies under Article 4 of the International Tax Agreement also met for the first time and included officials from Gibraltar, the UK and Spain.

Opposition MPs reserved their views about the Appropriation Bill at this stage and asked the Chief Minister to continue briefing them on the liaison meetings.