Treasury Minister Chris Thomas has moved to clarify the £400m bond arrangements following questions from a southern MHK about potential “double counting” of reserves.
Jason Moorhouse asked how much of the 2021 bond was allocated to Manx Utilities and what interest rate is being paid.
Mr Thomas confirmed that £176m of existing capital loans issued by Treasury to Manx Utilities were refinanced following the September 2021 bond issue.
In further exchanges, Mr Moorhouse raised concerns about the treatment of the bond within government reserves.
Reserves
“If £156m of the £400m bond has been spent, and only £3.7m is going into reserves each year, how can we right to actually include the full amount of the 400 million pounds within the reserves as assets?” he asked.
“Do we actually get double counting here in terms of we’ve got the 400 million pounds plus we’ve got the repayments that went to the sinking fund?”
Responding, Mr Thomas confirmed the current sinking fund balance stands at £54m, which he said is “ahead of the growth path needed to get to the £400m in 2051”.
He added: “External auditors, which come through the Tynwald Auditor General, don’t allow double counting and the like. But I don’t think that’s an issue at all.
“I’m sure that’s not an issue at the moment, even before we get to external auditors, Treasury wouldn’t allow double counting.”
Sink Fund
The minister explained that the sinking fund “receives contributions from general revenue, from the Manx Utilities Authority and from the Isle of Man Steam Packet”.
Detailing how the £400m was allocated, Mr Thomas said up to £80m was spent on Manxman and “then we agreed to refinance the consolidated loan and borrowing of the Manx Utilities Authority and we agreed to refinance the element of debt which had been used to purchase the Steam Packet”.
He invited Mr Moorhouse to discuss the arrangements further, noting “there does seem to be some misunderstanding developing in the public”.
Onchan MHK Julie Edge sought clarification on the Manx Utilities repayment period, to which Mr Thomas confirmed it operates on a reducing balance basis “pretty close to the bond maturity”.