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Concern over spending reserves misplaced, says Treasury Minister
TREASURY Minister Eddie Teare insists concerns about the depletion of government reserves are misplaced.
He was responding to comments made by Michael MHK Alfred Cannan who suggested it was ‘unwise’ to allow £200 million to be drawn from the reserve fund.
At this month’s Tynwald sitting, he asked the Treasury Minister to provide written details of the reserve fund balance and an estimate of what it will be on March 31 next year.
Mr Teare replied the balance of the reserve fund as at May 31 was £397.5 million but this sum would be reduced by about £200 million to a figure of £188.8 million by the end of March next year, allowing for the purchase of Pinewood shares (£24 million), an allocation of £100 million to a proposed Depositors’ Compensation Scheme Fund and transfer of £55 million to the revenue account.
Mr Cannan said: ‘I am very concerned about this proposed depletion of our reserve fund. I have already stated my opposition to the Pinewood deal and the Treasury Minister will have to draw up a highly convincing argument as to why such a Depositors’ Compensation Scheme Fund is needed when there are already safeguards in place.’
But the Treasury Minister said the figures should not have come as a surprise to Mr Cannan.
He said the Michael MHK should have listened to his statement at the same Tynwald sitting about the progress made in implementing the recommendations of the select committee inquiry into the collapse of the Kaupthing Singer & Friedlander bank – and specifically the aim to have a pre-funded depositors’ compensation scheme.
Mr Teare said it was announced in the Budget that £92 million – about a quarter of the reserve fund – would be used to rebalance public finances in the wake of the VAT bombshell.
The biggest draw on reserves – £55 million – is being made this financial year, followed by £31 million in 2013/14 and £6 million in 2014/15.
Mr Teare pointed out that the alternative to drawing on the reserve funds was quicker cuts. ‘There doesn’t seem to be the political appetite for that,’ he said.
Mr Teare said: ‘We are on track, the economy is performing well. We are not being complacent.’
And he insisted that the intention, once public finances were fully rebalanced, was to replenish the reserve fund.
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Weather for Isle of Man
Monday 20 May 2013
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