Picardo admits to a lack of cash

* Prime Minister Picardo now recognizes that it is necessary to prioritize public spending

Acknowledging the dire state of public finances

* Mismanagement of public finances for years

* Picardo does little too late with his hands tied by increasingly frequent spending

* Public sector salary demands will exacerbate the fiscal situation

An imminent problematic budget could hurt electoral chances

* No advertisement in March about “an agreement»From Gibexit will aim for a budget expected before the elections

*Remote government»From the UK as well as in the British Virgin Islands

Wise words, but disturbing

Finally, the Prime Minister of the GSLP-Liberal Government, Fabian PicardoHe utters some wise but troubling words about the state of public finances. In response to a question in Parliament about the airport tunnel, he confirmed He finally recognized that public spending should be prioritized in a time of deficit. He said that “There are a lot of things to do in Gibraltar that cost a lot of money. The government is prioritizing that spending. And when we prioritize that spending, we may not see that we’re spending on something else that’s more important, I repeat, more important.”

Accept failure?

The acknowledgment of the dismal state of public finances in terms of public deficit came in response to questions about the imminent opening of the airport tunnel, “The Neverending Story”.[i]Or “the tunnel forgotten by time.” Point out the fact that Public finances have been poorly managed for years. And now, when the available cash flow is not enough to cover expenses, that focus and prioritization seems to have taken center stage in the minds of Mr. Picardo and his government. It’s been known for years. Few have declared the reality of excessive spending of the public treasury and public debt. Those who do have been criticized as “merchants of pessimism”.

Too young, too late

It is too late for Mr. Picardo’s Liberal government to do now, plus there is very little that can be done, as much of the spending imposed by previous governments is recurrent (and growing) public spending. Now the main option is to increase taxes. Covid has accelerated things but it is not the cause of the difficult financial situation Gibraltar is facing. It was previous financial mismanagement that had already put Gibraltar in such a poor financial position.

Public spending should at all times be given priority and a commitment to repeat (and increase) public spending. That was not the case. Unfortunately, Those of us who preached the message of financial prudence were ignored. The political ambition that fueled the desire to win was too great. Defeated the need to ensure fiscal stability. And so the opposite happened: growl and waste prevailed.

A growing problem

to the top, The pressure on recurrent public spending is mounting. There are clear signs of unions moving for higher wages. Among them, wage claims in the public sector. for example Unite the union It calls its affiliates to vote to bolster its impending negotiations for more wages and better conditions in the public sector. It is scheduled to hold a meeting with the government on increasing wages at the end of this month.

impending budget

The Unite move comes just before this year’s budget, which should be interesting, especially if it comes before the general elections, which are scheduled before the end of February next year.

The budget must take into account, not only the deficit and the need to reduce public debt, but also any impact on public revenues from salary increases and the prospects for salary increases. “an agreement” also “I do not agreeOn Gibexit, without being too unpopular with the current Liberal government – GSLP. The difficulty of achieving these conflicting goals is obvious. Measures to increase public revenues will be necessary. This can only lead to voters paying more to the government one way or another, be it by raising taxes or the prices of other public services. All this is unpopular with voters.

Early elections?

Everything points to early elections before the budget. The question is: Will the state of negotiations between the UK and the EU for a “deal” on Gibraltar allow elections to take place very soon? If a ‘deal’ for Gibraltar is announced before Easter, we will have another indication that early elections are on the horizon. Recent activity by the Gibraltar Social Democrats (GSD) indicates that the party believes early elections are possible. GSD seems to be moving towards a more electoral basis.

Turks and Caicos Islands and the British Virgin Islands

The UK’s Foreign, Commonwealth and Development Office (FCDO) learned the lesson from Avoid, as far as possible, imposing direct judgment After doing this in Turks and Caicos Islands A few years ago.

In the British Virgin Islands, the FCDO has implemented a different policy: to agree to a national unity government that implements prudent policies. This came in a report from the Investigation Committee on Corruption and Mismanagement. The FBI took this course rather than accept the investigative committee’s recommendation to impose a direct judgment. In the British Virgin Islands, the Government of National Unity has worked under the supervision of the FCDO to implement all investigation recommendations and other requirements of the FCDO. The possibility of imposing direct government was left up in the air by order of the Privy Council which allowed it to be applied immediately if the Government of National Unity did not do what had been agreed with the FCDO.

Government by remote control

The way forward in the BVI was, in essence, a “Government by remote control”» from FCDOAnd But leaving the semblance of local democracy. It is hoped that this form of “Government by remote control”»It has not been or will be applied in Gibraltar.

However, the state of public finances and excessive indebtedness, with the UK guaranteeing the last tranche of £500m of loans, could lead to a lot of speculation on this front. Any “agreements” on Gibexit and the following budget may be additional indicators.