Covid-19 Coronavirus

Approval sought for Government debt issue

Thursday, 3 June 2021

The Treasury Minister has today confirmed his intention to ask Tynwald to approve a Government debt issue of up to £400m to take place this year, subject to market conditions.

The debt issue will have at its heart a £160m refinancing of the Isle of Man Steam Packet Company and a £178m refinancing of current Manx Utilities internal debt to the Treasury. 

The remaining balance will be additional funds for future investment, although it should be noted that the exact sum of any borrowing will not be finalised until all market-related options have been examined and considered.

Treasury Minister Alfred Cannan MHK said:

‘I must be clear that Isle of Man Government finances are in a healthy condition and while this is certainly not a case of borrowing to pay for the pandemic, nevertheless the cost of the pandemic may restrict plans for future investment.

‘There are three other important factors to consider. 

‘Firstly, it was always the intention that the Steam Packet took on an appropriate debt structure to pay for both the Manxman cost of £80m and to repay a Government loan of £76m. The debt issue will allow for this to happen in a cost-effective and suitable manner. 

‘Secondly, with interest rates at a favourable level and in considering both the impact of COVID but also likely future commitments for infrastructure on our Island, it is an appropriate time to undertake this exercise.

‘Thirdly, the refinancing of Manx Utilities’ internal debt can be managed in such a way so as not to disturb their financial plans and incur additional consumer cost.’

He added:

‘I am confident that raising this debt is being undertaken with solid foundations and that it is in the best interests of the Island to do so at this point.’

Treasury has appointed external professional advisors to assist with the process.

In a further motion to Tynwald, the Minister will also seek to bolster the contingency fund available to the Treasury for unforeseen expenditure by £20m. 

Mr Cannan stated:

‘The COVID impact on the contingency fund continues to be felt and it would be irresponsible not to give the Government some room for manoeuvre during the election period and while Tynwald is in recess.’

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