True cost of borrowing must be clear
The reputation for prudency on which Guernsey would once pride itself is under serious pressure as the lack of infrastructure spending is finally catching up with the States.
It’s highly likely that the States will go into debt again to fund a long wish list of projects – but it will face a challenge to take the community and indeed, many deputies with it.
Back in the day, Sir Walter Raleigh could have been our president of Advisory & Finance, spouting lines such as ‘never spend anything before thou have it – for borrowing is the canker and death of every man’s estate’. Such talk would have earned a standing ovation in the Assembly.
But the days of saving to spend are long gone.
The States has virtually no capacity to save, no time to build up reserves, and lots of things to spend on.
So Policy & Resources faces the challenge of trying to convince colleagues to break the States’ ultra-prudent rules on borrowing, while facing down accusations that it missed the boat for the best lending terms, by changing its stance on borrowing on the back of a single year’s better-than-expected finances.
A borrowing ‘explainer’ on the gov.gg website looks badly out of date and will need a refresh.
For if the island is to take on millions more in debt, islanders will need to be properly reassured that such a move is not going to blight their lives for generations to come.