States to borrow hundreds of millions

Friday 01 May 2020

After three days of debate, the Policy & Resources Committee has been given the go ahead to borrow an initial £250million, while using an extra £100m from the States' rainy day fund to help Guernsey's economy recover from the impact of the corona virus pandemic.

The loan will only be authorised for an initial period of two to three years to meet Guernsey's short term needs, before needing to go back to the States for further debate.

P&R members initially asked for approval to borrow up to £500m, but it was decided the second half would only be authorised once the States have decided on a recovery strategy and how the money will be repaid. Alternatively, P&R will be able to extend the initial tranche of borrowing beyond three years, under similar conditions.

However, the committee has been authorised to raise up to another £50m through an offer to individual local investors.

Pictured: Deputy Lyndon Trott.

"We need to invest in our future," P&R member, Deputy Lyndon Trott told his fellow States Members. "As the world has shown, there is no alternative to government financing of the economy and the community in this period of forced economic inactivity. Guernsey is not an exception. I wish it was, but it's not.

"All of this is going on right now whilst we're funding higher social spending from lower resources. We're going to need all the flexibility we can get for financing that can only come through borrowing. No one has a heavier heart about the need to take this step than me. But this is not the time to think with our hearts but our heads, rationally.

"Guernsey's recovery will be very different if the ability to borrow is not one of the key tools in this box.

"The question is not 'can we afford to borrow?', to which the answer is 'yes we can'. The real question is 'can we afford not to do this?'. No we cannot."