£50m loan requested to support post-Covid economic recovery

THE States are due to be asked to approve a £50 million loan to help fund Jersey’s economic recovery from Covid-19 and to sign off further borrowing before the end of the year.

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Treasury Minister Susie Pinel is planning to draw down on the £500 million ‘revolving credit facility’ that was agreed earlier this year which is being provided to the government by a consortium of local banks – Barclays, Butterfield, HSBC, Lloyds and RBS International.

A newly published report revealed that the minister plans to borrow £50 million to fund ‘fiscal stimulus’ measures, part of a £150 million package announced by ministers in July designed to kickstart the Island’s economy.

The revolving credit facility, under which money can be drawn down as required up to the maximum limit of £500 million over an initial two-year period, was entered into in May after Deputy Pinel signed off a ministerial order.

At the time she said that the facility would be used, if necessary, ‘in support of households and the economy during the pandemic and the recovery from it’.

The new report, which covers the minister’s financial policy relating to the pandemic, has revealed that she now plans to ask Members to approve £50 million of credit this year and may request further borrowing on top of that.

‘[The minister] intends to ask the States Assembly to approve the creation of a Fiscal Stimulus Fund from borrowing of £50 million within the Revolving Credit Facility,’ it says.

‘The minister may take this opportunity to seek the Assembly’s approval for additional lending and guarantees up to the end of 2020.

‘Any expenditure, borrowing, lending or guarantees after 1 January 2021 will be put forward in the Government Plan 2021- 2024 for the Assembly’s approval.’

The fiscal stimulus fund will be open to bids from government departments and ‘arm’s-length organisations’ for projects that will deliver a quick boost to the economy.

Bids could include capital projects, such as construction, and schemes for skills and training.

Ministers have indicated that the renovation projects at Fort Regent and the Jersey Opera House, which is due to remain closed for the winter, could benefit from the funding.

The report says that Deputy Pinel intends to meet the ‘ongoing costs’ of the pandemic with already-approved funding, which has been provided from States cash balances, until the end of the year.

It adds, however, that she is ‘acutely aware’ that a second wave of coronavirus may generate additional costs and she may need to ‘return to the Assembly for additional measures as appropriate’.

The minister has been given the go ahead to use up to £400 million from the Strategic Reserve – Jersey’s Rainy Day Fund. Before the crisis, the value of the reserve was £880 million.

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