Revolving Credit Facility for States of Jersey: Maximum of 500 million

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A decision made 7 May 2020:

Decision Reference: MD-TR-2020-0051
Decision Summary Title:	Revolving Credit Facility		Date of Decision Summary:	7th May 2020
Decision Summary Author:	Director of Treasury and Investment Management		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title:	Revolving Credit Facility		Date of Written Report:	5th May 2020
Written Report Author:	Director of Treasury and Investment Management		Written Report : Public or Exempt?	Exempt Articles 26, 33 & 34
Subject: Revolving Credit Facility
Decision(s): For the purposes of the limits to financing under Article 26 (3)&(4) of the Public Finances Law (as modified), the Minister for Treasury and Resources decided to approve the definition of financing to include: loans from external institutions e.g. banks the issuance of bonds finance leases (not operating leases) the assignment of debt from a third party sale and leaseback transactions The Minister also decided to:- Enter into a Revolving Credit Facility (“RCF”) (financing arrangement) on behalf of the States of Jersey for the maximum sum of £500 million on the terms detailed in an RCF Agreement and give any indemnities thereunder and to enter into any associated documents, Sign an Authorised Signatory’s Certificate in connection with the RCF Authorise the Treasurer of the States to sign all documentation required to enter into the RCF other than the Authorised Signatory’s Certificate Request the Treasurer of the States to make an initial utilisation request for £5 million Provide funding from the General Reserve to the Treasury & Exchequer head of expenditure of £3million, representing estimated costs in 2020, ahead of confirmation of actuals later in the year.
Reason(s) for Decision: The Coronavirus pandemic will have 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 Public Finances Law (as modified) the Minister may, in the name of the States, obtain financing of up to £500 million and may give guarantees and indemnities of up to £100 million in a financial year. Independent advice provided to the Minister recommends the implementation of the RCF to provide the maximum amount of liquidity immediately and to provide time to give proper consideration to future liquidity and asset management and to preserve optionality for the future. Whilst current estimates are that the total available in the facility will not be required, based upon high level cash flow forecasts and known allocations for additional expenditure, there is considerable uncertainty attached to the costs of the coming months. The facility accordingly acts as an insurance policy and contingency against unknown further costs and liquidity challenges; enables bold fiscal stimulus measures to the economy and provides certainty given that the future availability of credit is unknown. The entry into the RCF Agreement and the giving of any indemnities thereunder by the Minister in the name of the States of Jersey are within the powers conferred on the Minister by Articles 26 and 28 of the Public Finances Law (as modified). Under Article 28 of the States of Jersey Law 2005 a Minister may delegate, wholly or partly, functions conferred upon them by any Law to either an Assistant Minister or an officer. The Minister wishes to delegate authority to the Treasurer of the States to sign the RCF Agreement and all other documentation in relation to the RCF on her behalf.
Resource Implications: There are no human resource implications for the Government of Jersey arising from this decision, management of the RCF arrangements fall within the current operation of the Treasury and Investment Management team. The finance costs in relation to the RCF will only be quantifiable as drawdowns are made. The Minister plans to provide details of the incurred costs as part of the required semi-annual reporting to the States Assembly. Drawdowns will be paid into the Stabilisation Fund. The Minister will approve transfers, as needed, to the Consolidated Fund as permitted by the Public Finances Law (as modified).
Action required: Head of Financial Governance to inform the Director of Treasury and Investment Management that this decision has been signed. The Treasurer of the States to sign the RCF Agreement and accompanying documents.
Signature:		Position: Deputy S J Pinel, Minister for Treasury and Resources
Date Signed:		Date of Decision: