Gibraltar To Announce Fresh Fiscal Measures

by Jason Gorringe, Tax-News.com, London

31 January 2012

The incoming Gibraltar government has warned that the previous administration significantly understated the extent of Gibraltar's deficit, triggering the need for corrective fiscal measures this year.

In a Ministerial Statement on January 18, 2012, the new Gibraltar Chief Minister Fabian Picardo said that according to an independent audit, when the government assumed office on December 9, 2011, it had been left with just GBP20m (USD31m) to spend without breaching the territory's self-imposed debt limit.

Picardo said the previous government had failed to take account of losses made by public-sector entities in calculating the territory's fiscal balance, which will impact the budget by GBP100m, nullifying the previous government's projected surplus.

Picardo said due to GBP60m in new expenditure in the pipeline in the coming year, the maximum permitted level of borrowing, which is capped at 80% of government revenue in the financial year, is set to be breached without fiscal corrective measures.

The new government said it would not seek to relax borrowing limits, as proposed by the previous government. “We will not break our electoral commitment... by bringing measures to Parliament to increase debt,” he stated. “We shall find alternative ways of addressing this problem,” he said.

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