I am writing to provide an update on the UK Loan Guarantee to Gibraltar, which the former Foreign Secretary, the Rt Hon Dominic Raab MP, made a Written Ministerial Statement to Parliament regarding on 19 November 2020 (HCWS588).

In 2020, the Chief Minister of Gibraltar sought financial support from the UK Government (HMG) 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 clear at the outset of the COVID-19 pandemic that it 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, HMG agreed to provide a Loan Guarantee to Gibraltar for a lending facility of up to £500m. 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 has drawn down £425m to date, expires in December 2023. The Chief Minister has requested an extension of the Loan Guarantee and FCDO and HMT 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 HMG about the financial liability of extending this guarantee. Based on this Checklist, the guarantee will be extended for a further 3 years by FCDO and HMT Ministers.

A departmental Minute has been laid in the House of Commons providing more detail on this contingent liability.