Tynwald to be asked to approve £400m government debt issue

The money would be paid back over a period of up to 40 years

The Isle of Man's parliament is to be asked to support £400m of government borrowing.

The money would be used to cover loan refinancing for Manx Utilities (MU) and the Isle of Man Steam Packet Company, buy a new ferry, and fund future government infrastructure projects.

It would be repaid over a period of up to 40 years.

Treasury Minister Alfred Cannan said the funds would strengthen the island's "war chest".

The cost of Covid-19 to the public purse is expected to be between £200m and £250m.

But Mr Cannan said that was not the only reason for the move.

Putting about £260m of the borrowed money straight into reserves, which stand at £1.65bn, would "bolster the government's ability to meet its major challenges going forward", he said.

The motion will be debated in Tynwald later this month

Current low interest rates meant now was "the right time to go and do this", Mr Cannan said, adding that the sterling bond market was likely to offer the "greatest liquidity".

Bonds are often used by governments to finance borrowing by guaranteeing investors a large repayment on a set date, with fixed-rate interest payments in the meantime.

About £178m of the sum would be allocated to refinance MU's internal debt to the Treasury.

A further £156m would cover a £76m loan made by the government to the Steam Packet when it was taken into public ownership, and the £80m cost of a new vessel.

Both government-owned bodies would be required to pay back the money borrowed on their behalf, including the interest, which will go into a sinking fund.

Tynwald will be asked to support the move at its June sitting.