Govt to report budget deficit of £55.3m, as Covid-19 costs rise to £362m amid slow recovery

3rd May 2022

The Gibraltar Government will report a deficit for the 2021/22 financial year ending March 31 of £55.3m, Chief Minister Fabian Picardo revealed yesterday.

The figure, which is usually announced at the budget session in Parliament, was disclosed as the Government published the Appropriation Bill for the next financial year.

The deficit is far lower than anticipated by the Opposition, which in recent statements critical of the Government’s “mishandling” of public finances had said it could be as high as £90m.

In revealing the deficit, Mr Picardo also announced that net borrowing had increased to £652m after cash reserves “just shy” of £120m.

The Appropriation Bill was published as the Government also released the latest accounts for the Covid-19 fund.

Gibraltar’s response to Covid-19 has cost £362m since the start of the pandemic, according to data that lays bare the impact of Covid-19 on Gibraltar’s economy.

Over the past year alone, Covid-19 cost Gibraltar nearly £135m, about double what had been expected.

The Appropriation Bill provides for £553m of spending from the Consolidated Fund, as well as an additional £1m of exceptional expenditure to cover the cost of the McGrail inquiry.

Among the main areas of spending are £128m earmarked for the Gibraltar Health Authority and nearly £63m on education.
The Bill provides too for contributions totalling £30m to Government-owned companies and a £40m contribution to the Covid-19 response.

A sum of £6.6m is also provided for the capital expenditure of Public Undertakings.

Mr Picardo said he had taken the decision to release the deficit figure on the same day he circulated to MPs the 300-page Estimates of Revenue and Expenditure for 2022/23, which sets out in detail his administration’s spending plans for the next 12 months.

The Estimates Book becomes public upon the commencement of the budget debate in Parliament, but a courtesy copy of the confidential document was also provided to the Governor, as has been the case each year since Mr Picardo become Chief Minister.

“The preparation of the Estimates Book this year has been a mammoth task,” Mr Picardo said.

“The book provides 300 pages of detailed information on all areas of Government expenditure and revenue.”

“This is 100 pages more than the last Estimates book prepared by the GSD when they were in office, which was only 195 pages with much less information than we now provide.”

“The team led by the Financial Secretary has had to battle with Covid and the challenges of the Omicron wave in dealing with all the detail that we provide in the most detailed, transparent and accountable exercise in public finance accounting in our history.”

“I thank the whole team for the work they have put into the Estimates Book, the Appropriation Bill and the Covid Response Fund Quarterly Statement to ensure that they have all been available for circulation to Members of Parliament and publication, respectively, today.”

“I look forward to debating the Appropriation Bill and these Estimates of Expenditure in Parliament during the course of the Budget debate this year, which is the ‘State of the Nation’ debate in our democracy.”

“For now, I believe it is incumbent on me to report to our people immediately the final figures of the deficit for the year as at 31st March, which is £55.3m.”

“As a result of the COVID pandemic net borrowing has increased to £652m after cash reserves of just shy of £120m.”

“Although these are figures usually disclosed in the Budget debate, I think it is important in these exceptional times that people should have those figures hot off the press on the same day as we have shared them with Members of Parliament.”


The figures laid out in 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.

The represents about double the Government’s forecast of £67.5m for the 2021/22 financial year at the time of the last budget.

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.

The figures show that in the 2021/22 financial year, the impact of first the Delta variant of Covid-19, followed by the Omicron wave, derailed economic forecasts amid travel disruption and changes to consumer behaviour and a drop in tourists.

The bulk of the Covid-19 spending has been targeted at covering shortfalls in government revenue that in some areas have been sharply higher than anticipated and totalled just over £107m for the 12-month period.

That was particularly the case in lost revenue from import duties.

At the time of the last budget, the Gibraltar Government anticipated having to cover a £19.2m shortfall in import duties during the current financial year.

The data published on Tuesday, however, put the actual shortfall in revenue from import duties far higher at just under £65m.

The data published on Tuesday also shows a provision of nearly £32m for the financial year to cover a shortfall in corporate tax, compared to a forecast of £28.7m at the time of the budget last year.

That was in part offset by the fact that the cost of covering loss of revenue from income tax was under £2m, compared to a forecast of £5.6m.

There was a stark disparity too between the forecast for healthcare and the actual year-end figure for payments from the Covid-19 fund to the GHA.

At the time of the budget, the Covid-19 fund was forecast to make payments to the GHA totalling £5.5m in the 2021/22 financial year.

The year-end cost as of March 31, 2022, however, stood at over £20m, driven up in large part by the need for ramped-up testing to monitor the spread of the different variants in the community and adjust the healthcare response accordingly.

At the time of the last budget, the Gibraltar Government had cautioned that its forecasts for Covid-19 expenditure were based on an honest assessment of what it anticipated, but with the express caveat that it might be different if Covid-19 came back, which it did.

On Tuesday, the Chief Minister left little doubt as to the serious impact of Covid-19 on Gibraltar’s economy.

“[The Covid-19 Response Fund accounts] show that the cost attributed to that fund since the pandemic begun is already over a third of a billion pounds, or over 15% of GDP in direct expenditure and lost revenue,” Mr Picardo said.

“That is huge and would be a problem for any economy, let alone an economy the size of Gibraltar.”

He said 2021 “…was not a year of recovery as many had wished and anticipated, but another year of lock downs and waves of new variants.”

“This meant that economic recovery was also impaired and revenue did not return as expected to the traditional heads of revenue, such as duty and corporate taxation.”

“That is a huge burden for any nation, especially a small nation like us.”

“As we now face the two financial years before a General Election is due, we will work to return our economy to surpluses as soon as possible and to reduce the debt in order to ensure that we put our public finances back onto the sound footing on which they were when the pandemic begun.”

“That is the work we are now embarked upon and on which I will say more during the budget debate also.”
Reacting to the latest fund accounts, Roy Clinton, the GSD’s Shadow Minister for Finance, noted the disparity between forecasts and actual spend.

“The Covid-19 Response Fund has to March 31, 2022, incurred an expense over the year of £135m taking the cumulative total cost of Covid-19 so far to £362.4m,” he said.

“It was budgeted that Covid-19 might cost £67.5m in the year to March 31, 2022, so in that context £135m means the full year budget has been exceeded by £67.5m, or double the amount estimated.”

“The details gazetted show that the annual recurrent expense spend in respect of the GHA was £14.6m more than expected.”

“Revenue loss in respect of Import Duty is worrying in needing £64.9m of support versus the budgeted £19m for the full year.”

“The forthcoming budget debate will no doubt shed light on how the excess of £67.5m over budget has been funded.”

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The Government has published an Appropriation Bill which sets out the expenditure it will ask Parliament to approve for the financial year 2022/23.

This includes £623,954,000 in respect of the Consolidated Fund which is recurrent expenditure. There is an additional £66,862,000 being sought for the Improvement and Development Fund which covers capital projects.

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.”

Season 8 - Episode 30 - 05/05/22 - Daniel Feetham | Unite The Union's Stuart Davies

Danny Feetham, the true leader of the GSD, and the individual who, undoubtedly, is the person who should have been and should be Chief Minister of Gibraltar, was seen in full flow and glory in the Viewpoint interview broadcast last Thursday, 5th May 2022 on GBC, although he said he would not challenge Keith Azopardi for the party leadership.

One may not fully agree with all the policies he puts forward, but he is clear and unequivocal. It is difficult not to agree with much of what he says, especially as regards public finances, deficits, and borrowings, on which, he will be proved to have been right.

The sadness is that, because he put forward the truth before general elections, namely, the care needed to avoid the financial mess that the GSLP-Liberals have led Gibraltar to, he was not elected to government in the 2015 General Election. Unfortunately, the financial populism, and unaffordable generosity, of the GSLP-Liberals won the day, as it had done in 2011.

The truth of what Danny was saying is beginning to be seen now, and will come into plain sight over the next few months. It will be much to the unfortunate suffering it will cause to many. The fault will lie fairly and squarely with the GSLP-Liberals, and the populist extravagance that it has engaged in.


Danny’s position on the public debt, which he has preached since 2010, reflecting that repeated over and over on this blog whilst even the GSD were still in government, is unassailable. Gibraltar simply could not afford to borrow and spend as much as the GSLP-Liberals have done since 2011.

His explanation of the difference between the public deficit and the public debt is crisp and clear.

It is simple, the public deficit, the difference between government income and expenditure, may not have been avoidable because of the pandemic. However, the ability to meet and deal with it has been hugely undermined by the massive on- and off-book public debt incurred by this GSLP-Liberal Government. The off-book debt is the borrowings of government owned companies secured on public assets, which in the end fall back on the public purse.

Danny did, rightly, clarify that the public deficit could have been less, had the GSLP-Liberal Government not increased public recurrent expenditure so massively and extravagantly, and to the detriment of Gibraltar, since 2011.

In short, we face now the ‘perfect storm’ in public finances, as Mr Feetham put it, which is the creation and direct fault of the GSLP-Liberal Government.

Danny puts forward the absolute need for accountability and transparency in government generally, but in public money matters importantly and especially. They have been missing in Gibraltar for ever. It is time to put that right, starting with a Public Accounts Committee, which Danny supports.


Danny’s position on corruption and abuse in public office is that he does not consider that an Anti-Corruption Authority is needed, but that it can be dealt with by a properly independent, resourced, staffed and financed Royal Gibraltar Police [RGYC].

The reality is that such a specialist unit of the RGP is equivalent to an Anti-Corruption Authority. The history is that it is not what the RGP have ever done, even when the GSLP-Liberal Government entrusted them to deal with corruption in and before 2015, which makes Danny’s suggestion peculiar. If it has not worked under the RGP to date, why should that work in future, as suggested by Danny?

All that, however, is detail and nit-picking, the important issue is that he believes there is corruption and abuse of public office, and that there is a need to deal with it. Whether it is done by an Anti-Corruption Authority or an Anti-Corruption Unit within the RGP is political and practical detail.

What is also important is his reference to and recognition that the GSLP-Liberal Government is stuffing committees, including GBC, with its supporters. A bad trend that does nothing for accountability and transparency.


Contrary to the views expressed in this blog, Danny supports that Gibraltar should be represented in the Westminster Parliament. He went further and expressed support for devolved integration.

He explained that that the main market for Gibraltar in financial services and gaming was the UK, going on to argue that if there is no Gibexit treaty, those links with the UK would need to increase, so people will want a representative in the UK Parliament.

He supported that argument by saying that Spain’s nightmare was no treaty, which would make it inevitable that Gibraltar would become more UK facing.

Unfortunately, he ignored, and was not asked, about all the other economic successes of Gibraltar which are directly linked to a free-flowing frontier, not least tourism. The reality is that becoming more UK facing would not resolve the economic issues that Gibraltar would face if no Gibexit treaty is reached, which will be big. The onward bad effect on public finances would be inevitable.

He suggested that any four-year Frontex arrangement would give time to redirect the economy. That begs the question, why is that redirection not happening already and in any event? If it was available, it would have had the effect of hugely increasing our economy anyway. No-one would have missed that opportunity were it to exist. Pie in the sky, perhaps?


It was great to hear Danny say that there are issues in politics where one must put country before politics, and that the current negotiations being undertaken by the GSLP-Liberal Government was one. But he left his powder dry on the subject, despite saying that space must be given for a ‘deal’.

In contradiction, he went on to support a referendum to decide on any ‘deal’. The conflict is that once it is accepted that a government should negotiate a treaty, that acceptance includes that the government has a mandate to enter it. If there was to be a referendum, it should have been held before any negotiation not after.

The issue of “fudging red-lines” is not one for referendum. It is one for the GSLP-Liberal Government, with the UK, to ensure that red-lines are not crossed. A referendum question cannot be prepared to cover all the permutations of any treaty, nor is it likely that negotiations can be held subject to such a sword of Damocles hanging over any outcome of such talks.


Danny’s greatness shone through in all matters, but more so in how he dealt with the issue of his brother Nigel’s newfound support for the GSLP-Liberal Government, despite his having been a GSD Executive member in the past. Danny said that, just as he had not followed his father’s footsteps, in a democracy, Nigel could decide his political support for himself.

In essence, he praised Nigel’s ability in financial services, and so his ability to be a shadow finance minister, whilst expressing disagreement on his views over public spending and public borrowing through the vehicle of companies. He added that such action by the GSLP-Liberals will soon be shown up as being disastrous.


All in all, a star performance by Danny, which Gibraltar’s political scene is lacking and missing with the current GSLP-Liberal Government, assisted by the GSD Opposition under the lacklustre leadership of Keith Azopardi. It was a performance that points strongly at Danny staying and standing for election with the GSD.

A star performance from an individual that Gibraltar will regret not having elected as Chief Minister. It is a reality that many will see too late, when the downside of what the GSLP-Liberals have done over the last 11 years comes home to many.

Danny does not answer the question whether he will stand at the next election, but what he highlights is that he has been in Parliament for over two decades, as the longest serving GSD MP, his fulfilment from the constituency work he does to help those in need and with issues arising from government matters, and his enjoyment of it all.

Congratulations to you Danny, keep it up. We may not agree in every detail of policies, the GSD may not have my support under its current leader, but you have my admiration and full support. Give me a way back into the GSD by taking back its leadership, despite you having said you will not challenge Keith Azopardi’s leadership.

Sadly, you gave your support to Keith Azopardi when he was elected leader. Unhappily he is the central reason why the GSD will likely not be elected, so take it back, it is yours for the taking.