Scrutiny calls on P&R to present emergency Budget
SCRUTINY has put a series of questions to Policy & Resources which it wants answered before the States debates the proposal to borrow up to £500m. to fund the impact of the Covid-19 crisis.
A special sitting of the Assembly has been convened for Wednesday to discuss P&R’s urgent Funding of Financial Response policy letter.
‘The SMC believes that an emergency Budget should be presented, not least to demonstrate that the States are reducing as much discretionary spend as possible and stopping any projects that are inappropriate at this time,’ said Scrutiny Management president Deputy Chris Green in a letter to P&R president Deputy Gavin St Pier.
SMC noted that alternative approaches were available which might include lower revenue spending based on a number of different scenarios for 2021 and 2022.
It would be helpful therefore to know why an emergency budget was not planned.
The Core Investment Reserve is the island’s Sovereign Wealth Fund specifically for emergencies. SMC would like to know what the rationale is behind P&R’s decision to only request delegated authority to use £100m. of the funds available.
The policy letter did not specifically reference a need for long-term borrowing, the SMC president said.
In addition the total available funds in the General Revenue Reserve and the Core Investment Reserve would appear to be sufficient to supply the initial amount indicated by the modelling that has been undertaken to inform the proposed spending of £172m. to £190m.
It was a matter of concern that the policy letter contained no detailed economic analysis to inform the request for delegated authority to borrow up to £500m.
‘In particular, the SMC believes that the proposed spending must include and attempt to re-imagine the future economy, post-pandemic, rather than basing investment decisions on returning to the economy as it existed previously,’ said Deputy Green.
This would include a thorough review and prioritisation of the current capital portfolio to determine which projects are no longer relevant or necessary as well as those which need to be accelerated or added.
SMC would like to see the recovery strategy and plan referred to in the policy letter as soon as possible and it was concerned that the States would potentially be borrowing a further £250m. against an as yet only proposed and un-costed plan.
SMC is also asking what form the borrowing would take and the period over which the money would be borrowed? It wants to know the type of lenders for each tranche and whether local lenders would be considered?
It also wants to know when the tranches would need to be borrowed given the potential need to re-prioritise the capital portfolio?
It is asking how much the borrowing will cost including fees and how would the States repay it?
