Reason(s) for Decision:
The Coronavirus pandemic is having a significant social and financial impact on the lives of Islanders and presents a significant level of challenge for Jersey’s economy. During this unprecedented period of uncertainty for the Island, it is vital that the Minister for Treasury and Resources can make available sufficient funds to support Islanders and businesses on a timely basis.
In signing MD-TR-2020-0029 the Minister has declared an immediate threat to the health or safety of any of the inhabitants of Jersey and to the stability of the economy in Jersey and is satisfied that those circumstances require the application of the modifications set out in Article 24(9) of the Public Finances (Jersey) Law 2019, as amended by Public Finances (Amendment of Law) (Jersey) Regulations 2020 (“Public Finances Law”). Consequently, the Public Finances Law applies with those modifications.
Under the modifications the limit on loans that the Minister may make in a financial year is increased from £3 million to £100 million, and the limit on total outstanding loans made by the Minister is increased from £20 million to £100 million.
This loan is being agreed under the Minister’s policy to act as lender of last resort where in the Minister’s opinion there is clear and unambiguous public interest in furthering the continuity of a business which is, in the Minister’s opinion critical to the economic recovery following the restrictions placed on islanders as a result of the COVID 19 pandemic.
Capitalisation of interest will occur after the Minister’s modified powers under the Public Finances (Amendment of Law) (Jersey) Regulations 2020 have ended. This is therefore approved under the Minister’s existing powers under Article 27
of the Public Finances (Jersey) Law 2019:
(1) The Minister may, in the name of the States, lend money from the Consolidated Fund.
(2) The total amount of all loans under paragraph (1) that may be made during a financial year must not exceed £3 million, to be calculated without reference to any interest or premium that may be charged with respect to the loans.
(3) The total outstanding amount of all loans under paragraph (1) at any given time must not exceed £20 million, to be calculated without reference to any interest or premium that may be charged with respect to the loans.
Article 15(3) of the Public Finances (Jersey) Law 2019 states that the approval by the States of a government plan authorises the Minister to direct how an approved appropriation for a reserve head of expenditure in the plan may be spent (including on another head of expenditure) in the first financial year covered by the plan.
The current Contingency Allocation Policy (published as R.23/2020) sets the requirement for all allocations from contingency to be considered by the Investment Appraisal Board, Principal Accountable Officer and States Treasurer prior to submission to the Minister for approval, however it also states that ‘Where a request is made for £100,000 or less, or where the Minister is satisfied that there is an urgent need to provide funding in the public interest, an allocation may be made by the Minister on the recommendation of the Treasurer.’
In this instance the Minister is satisfied that there is an urgent need for funding and given the amount being allocated to the Treasury & Exchequer budget additional approval was sought from the Principal Accountable Officer.
The Business Case was presented to the Council of Ministers on 10 th June who have provided their support to the proposal.