States borrowing cap is set at 15% of GDP

Thursday 30th April 2009, 2:29PM BST.

John Gollop A LIMIT has been set on any States borrowing,

It will be 15% of Guernsey’s gross domestic product, which at current levels amounts to £250m.

The Policy Council, which proposed the fiscal framework that set the limit, initially wanted it to be 20% but decided this week to back an amendment by Deputy John Gollop (pictured) which reduced that to 15%.

The States will decide next month whether to pursue external borrowing of £175m. to fund a £301m. capital project wish list.

Chief Minister Lyndon Trott said after the vote on the framework that it meant the States would be transparent and open in its fiscal affairs.

It will also lead to extra scrutiny by both the public and a professional panel.

‘Once a year, probably in June, the States will be presented with a report which will advise as to whether the criteria that have been approved by the States have been strictly adhered to, so taxpayers can take comfort from the fact that for the first time ever the States has a robust and credible fiscal framework in place,’ said Deputy Trott.

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View more: Chief Minister news, Lyndon Trott news, States Borrowing news.

1
Eric

May 1, 2009 at 9:22 pm

It truly makes one think: how these States people can, with the flick of a hand, can put an Island into debt: It can only be either bad management, or idiocy. or lack of politics.

What they are doing is to create a modern day Greek tragedy “Sisyphus” to be exact–

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2
TL

May 2, 2009 at 2:27 pm

Eric – so (assuming that you own a house), you paid for it in cash upfront did you?

There is nothing wrong with borrowing in principle, provided that you can afford to pay it back and provided that the cost of borrowing does not stop it being cost effective.

If businesses did not borrow to fund their income generation, there would be very few businesses running today.

Whether the proposed borrowing is for the right reasons, the right amount, at the right cost, or will be repaid over the right timescale are the questions that should be asked. Objecting to borrowing in all circumstances prevents good management and is, dare I say it, idiocy.

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3
Eric

May 2, 2009 at 5:51 pm

Of course you may say whatever you wish;

However just think it over. Who has to repay the amount whatever it is: Once again the Donkey;
your reference to buying a house sounds so ludicrous to me: Of course if I borrowed to build a house, (I have so done) then I know exactly why and how and when it will be paid back.

Now our CM with ideas bigger than his already high esteem of himself decides as if he was a worth while head of state To take a trip to Washington with Entourage mark that; and who will pay. unnecessary as was the trip to China. and all other trips of ego status.

They live in a cloud of illusion, and should be stopped how.

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