Government to ask Tynwald for approval to borrow £400 million

Cannan says move will lay 'solid foundation' for next gov't'

The treasury minister is set to ask Tynwald later this month for permission to borrow £400 million.

If approved the sum will be used to refinance around £260 million in internal debts owed to government by the Steam Packet and Manx Utilities. 

£80 million would be paid to the ferry company for new vessel 'the Manxman' - remaining funds would be available for capital spend on health, climate change and infrastructure.

Alfred Cannan says market conditions like low interest rates mean it could be cheaper to borrow rather than take from reserves.

The £200-250 million impact of Covid-19 on the Manx economy is also a factor behind the financial motion to Tynwald.

Mr Cannan has warned 'the conditions may not be there' for similar borrowing in six months time with lower interest rates an attractive draw.

It's understood that Treasury views the sterling bond market as 'likely having the most liquidity'.

External advisors have been chosen to help government with the process with any borrowing estimated to last 'up to forty years'.

The internal debts to be refinanced include £178 million worth owed by Manx Utilities for infrastructure.  

Mr Cannan says 'no costs will be passed on to customers and the authority's financial plans won't be disturbed'.

When the Steam Packet was purchased in 2018 it was loaned £76 million which will now refinanced as part of the proposal. 

Despite the proposed borrowing, and refinancing, both the publicly owned companies will continue to pay back Treasury.

Mr Cannan spoke to Ewan Gawne: