The what, why and how of debt
NEW-FOUND enthusiasm for borrowing money within the States of Guernsey is likely to cause yet another schism among our elected representatives.
The States’ record over borrowing is an unhappy and relatively murky one, with support very much in the eye of the politician beholder and the spending priority of the day.
Nobody can quite be sure if the States’ previous excursions into taking on debt have been a success.
There was the £330m. bond in 2014, which was supposed to consolidate all States’ trading debt, before we discovered that some trading boards were reluctant to use it. That is still only half-spent.
There was the £225m. – the P&R of the time actually wanted £500m. – revolving credit facility agreed in 2020 when the mood within the States was to ‘Build Back Better’. Whatever happened to that – it seems relatively little was ever drawn down – and indeed, the concept?
Some members are saying that the best timing has been missed and it will cost the States millions more than the ‘free money’ available a couple of years ago. Others will argue that the time for borrowing has come.
And there will still be those in the States who believe that going into debt is 'the root of all evil’, or some-such.
As well as justifying new debt, the States needs to show clarity on what it will be doing, how, and why.