Up to £600m. could soon be available to help the Bailiwick through coronavirus crisis
UP TO £500m could be borrowed to manage Guernsey’s financial crisis, as well as up to £100m. being sought from the States ‘rainy day fund’, as the Bailiwick faces an unprecedented situation, Civil Contingencies Authority chairman Gavin St Pier has said.
Deputy Gavin St Pier said Guernsey would need to find £170m. to £190m. in 2020 to cover the unexpected drains on finances, including the financial support scheme for business and reduction in revenue from all sources, as well as Aurigny’s requirement. He warned these estimates could increase if there were further waves of the virus.
An urgent policy letter is set to be presented to the States of Guernsey this week to try and find the money to cope with this.
This will include a request for up to £100m. from the core investment reserve – also known as the States rainy day fund. Deputy St Pier warned that the States’ investments had declined by about 11% during the first quarter due to the falling market and he said that it was best not to cash in those investments now as it would crystallise the losses.
‘We will be seeking authority for the Policy & Resources committee to borrow up to £500m. in order to provide the liquidity to fund business support measures, to replace income lost as a result of Covid-19, to service our cashflow requirements as payments to the States are deferred… and to make overdraft facilities available to the trading assets,’ he said.
‘And of course also importantly to provide firepower to our recovery plan, as we develop that. These are eye-watering sums of money.’
Deputy St Pier said they were now trying to deal with the economic crisis, as well as the public health crisis.
‘The economic shock is undoubtedly severe and we should all expect that recovery from the economic crisis will take longer than the public health crisis,’ he said.
He said the full impact could not be predicted, as it would depend on the timescale of the public health measures and how fast Guernsey could restart the economy.
He warned that this would have an impact in 2021 and beyond, which was why they were planning ahead.
