Revolving Credit Facility: Drawdown

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A decision made on 29 November 2021

Decision Reference: MD-TR-2021-0135
Decision Summary Title:	Drawdown from the Revolving Credit Facility		Date of Decision Summary:	26th November 2021
Decision Summary Author:	Manager - 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:	Drawdown from the Revolving Credit Facility		Date of Written Report:	18th November 2021
Written Report Author:	Manager - Treasury and Investment Management		Written Report: Public or Exempt?	Exempt (Article 34 – Economic and Financial interests of the States)
Subject: Utilisation cap for the Revolving Credit Facility.
Decision(s): The Minister approved a utilisation cap on the Revolving Credit Facility (‘RCF’) of £96 million in total, to allow the Government of Jersey to meet their cashflow and liquidity requirements as they fall due. This includes £21 million relating to borrowing for Our Hospital, to be replaced by a long-term bond in 2022. The Minister authorised the Treasurer of the States to complete monthly utilisation requests, as required, within the limit of this cap for November and December 2021.
Reason(s) for Decision: In signing, MD-TR-2020-0051, dated 7th May 2020, the Minister agreed to enter a £500 million RCF on behalf of the States of Jersey to provide short-term liquidity. Agreement to withdraw funds from the RCF was approved in the States Assembly 130/2020 (Government Plan 2021-24) which approved a maximum borrowing limit of £335.953 million (excluding the Fiscal Stimulus Fund). By utilising the RCF, the Minister ensures that liabilities can be met as they are forecast to fall due until the end of December 2021. In line with paragraph (b) of P80/2021, ‘Our Hospital budget, financing and land assembly’, approved by the States Assembly 7th October 2021, a further £21 million will be drawn from the RCF to fund the cost of Our Hospital. This will be paid into the Strategic Reserve in-line with paragraph c), but then immediately transferred back to the Consolidated Fund as a transfer between funds, in line with paragraph (d), section (i). It is planned that this borrowing is repaid when a longer-term bond is issued in 2022.
Resource Implications: The decision to set a drawn down cap incurs no costs but any utilisation of the RCF will incur interest costs at the Risk Free Rate plus the approved margin. The estimated financing costs of the RCF are included within the Government Plan 2021-24, albeit the actual outturn will be lower given the limited use of the RCF to date. Once a utilisation is made the Consolidated Fund cash balance will increase by the amount of the request, the investment return on this amount is deemed to be negligible over the short period of time. The completion of the utilisation request to the agent bank and the management of the transfers form part of the day-to-day activities of the Treasury and Exchequer.
Action required: The Head of Financial Governance to notify the Director of Treasury and Investment Management when the decision has been signed.
Signature:		Position: Deputy S J Pinel, Minister for Treasury and Resources
Date Signed:		Date of Decision: