7th March 2022
Gibraltar’s response to Covid-19 has cost £311.4m since the start of the pandemic, according to Gibraltar Government data that signals slower-than-anticipated recovery in key areas.
The figures are laid out in the latest accounts of the Covid-19 Response Fund published by the Gibraltar Government, which shows spending of £84.1m in the period from April 1 to December 31, 2021.
The Covid-19 fund had previously incurred costs of just over £227m for the financial year ending March 31, 2021.
The data shows that, in some areas, spending from the Covid-19 fund over the past nine months has been far higher than anticipated at the last budget.
The Gibraltar Government said this has been in large part the result of the Omicron wave of infections, which required the GHA to ramp up testing to track the spread of Covid-19 in the community and adjust its response accordingly.
Likewise, the slow return of tourism, itself impacted by renewed restrictions as Omicron spread around the globe, dented revenues in other areas including import duties on goods purchased by visitors.
That required outlay from the Covid-19 fund to cover shortfalls in government revenue.
At the time of the budget, for example, the Gibraltar Government had anticipated having to cover a £19.2m shortfall in import duties during the current financial year.
But the real figure, as of December 31, already stood at just over £47m.
At the time of the budget, the Covid-19 fund was also forecast to make payments to the GHA totalling £5.5m in the 2021/22 financial year.
The current cost as of December 31, 2021, however stood at nearly £10.4m.
In other areas of Gibraltar’s pandemic response, spending from the Covid-19 fund was lower than forecast though.
The government expected payments of £5.6m to cover shortfalls in income tax in 2021/22, for example, but as of December last year, no funds had been allocated for this.
The forecast for payments to cover company tax shortfalls for 2021/22 was £28.7m, but as of December, the actual figure stood at just over £15m.
Chief Minister Fabian Picardo told the Chronicle the forecasts had been hit by the last wave of Covid-19 infections, from which Gibraltar, along with the rest of the world, is only just emerging.
“Our estimates at budget time were based on the most honest assessment of what we anticipated, but with the express caveat that it might be different if Covid came back,” he said.
“Unfortunately, we saw less tourists than anticipated, Covid come back after the summer and we were not doing ‘business as usual’.”
“That meant more testing was required. There was also a wider impact on revenue generally.”
“All of that together accounts for the increased costs we are seeing.”
But GSD MP Roy Clinton said the latest data, coupled to longstanding concerns about public spending, pointed to a “particularly bleak” outlook for the current financial year.
“It was budgeted that Covid-19 might cost £67.5m in the year to March 31, 2022, so in that context £84.1m means the full year budget has already been exceeded by £16.6m with a quarter of the year remaining,” he told the Chronicle.
“The details gazetted show that quarterly capital and recurrent expense spend is stable but £5m more than expected in respect of the GHA.”
“Revenue loss in respect of income tax has so far not needed support from the Covid-19 fund but this quarter £15m support was required for corporate tax [and] import duty is still not showing signs of recovery, already needing £47m support versus the budgeted £19m for the full year.”
“Taken together with Sir Joe Bossano’s warning of a potential budget overspend of £40 million, the financial picture for the full year to March 2022 is looking particularly bleak and likely to result in a budget deficit close to £100 million.”