Treasury: 'Absolutely appropriate' to borrow £400 million

It says it has a 'clear mandate' from Tynwald

Treasury says it is 'absolutely appropriate' that it borrowed £400 million at the end of this government administration.

Government has issued a sustainable bond at an interest rate of 1.625% which will be paid back over 30 years.

Details of the repayment schedule will be included in next year's Budget.

Treasury says the rate is 'very good' and 'historically low'.

It says the money will be spent on projects, such as those outlined by the Sustainable Finance Framework, however the specifics will need to be decided by the next administration.

£80 million will be given to the Steam Packet Company to assist with the construction of its new vessel.

Treasury Member Bill Shimmins says it was appropriate to make the decision to secure the bond despite being in the final weeks of a government administration:

 Projects in the Sustainable Finance Framework include green issues such as:

• Purchasing low and zero-emission vehicles and active travel plans
• Infrastructure relating to and development of renewable energy
• Enhancement of terrestrial and marine biodiversity
• Programmes to preserve water assets and improve wastewater treatment
• Flood protection and climate monitoring

There are also a number of social projects listed including:

• Access to education
• Increasing access to higher education for low income families
• Extending healthcare capacities
• Extending supply of social and affordable housing and improving the quality of existing facilities.
• Supporting employment initiatives
• Improving well-being of vulnerable people
• Improving access to public services

Caldric Randall is Treasury's Chief Financial Officer:

The introduction of this scheme has been picked up by international media.

Bloomberg has reported that 'The UK has been beaten to the sterling ethical bond market' by the Isle of Man.

David Katimbo-Mugwanya, a fund manager at Edentree Investment Management, told Bloomberg:

"They've not tapped the market for the last 20 years and now is just about the perfect issuance conditions: rates at rock bottom, spreads at the tightest that they've been, demand for green bonds quite heavily oversubscribed.

"They're likely to get a lower rate with that label on there. That's not to dismiss what they're doing with the proceeds; just that the environment is conducive."