I am writing to provide an update on the UK loan guarantee to Gibraltar, regarding which the former Foreign Secretary, the right hon. Member for Esher and Walton (Dominic Raab), made a written ministerial statement to Parliament on 19 November 2020—HCWS588.
In 2020, the Chief Minister of Gibraltar sought financial support from the UK Government in the wake of the covid-19 pandemic. The pandemic had a major impact on all of the overseas territories, including Gibraltar, where it impacted around 60% of its economy. The pandemic gave rise to the enforced closure of a large measure of the economic activity in Gibraltar, and the Government of Gibraltar instituted a financial support package broadly similar to that in the UK.
The UK Government made it clear at the outset of the covid-19 pandemic that we expected the overseas territories to make full use of their financial resources in order to address the needs of their people, but that we would consider requests for further support on a case-by-case basis, to complement comprehensive local responses. Following discussions with the Chief Minister, the UK Government agreed to provide a loan guarantee to Gibraltar for a lending facility of up to £500 million. This was to provide resilience to the Government of Gibraltar’s finances.
This initial loan and UK loan guarantee was for a period of three years. The existing loan facility, under which the Government of Gibraltar have drawn down £425 million to date, expires in December 2023. The Chief Minister has requested an extension of the loan guarantee, and Foreign, Commonwealth and Development Office and HM Treasury officials have worked with Gibraltar’s Financial Secretary to complete a contingent liability checklist. The checklist confirms the Government of Gibraltar’s capacity to meet any debt repayments and thereby reassure the UK Government about the financial liability of extending this guarantee. Based on this checklist, the guarantee will be extended for a further three years by FCDO and HMT Ministers.
A departmental minute has been laid in the House of Commons providing more detail on this contingent liability.