Treasury chiefs have dismissed an election candidate’s claims that the island could go bankrupt in four years.
The claims were made by Douglas Central candidate Richard Falk.
He said: ‘Once the cash reserve is at zero — which it will be very soon — we are effectively insolvent. If we spend the National Insurance fund, we can stave off bankruptcy for a few more years but will have no way of paying future pensions.’
But financial controller at the Treasury Caldric Randall said that at the budgeted levels of expenditure the reserves can cover the anticipated requirement ‘for many years’ and if the budgeted assumptions hold would be able to do so ‘for many years’.
In 2015/16, due to a number of contributing factors, there was actually a net increase in the externally invested reserves, he said.
Last year’s budget had assumed that we would expend £78m from our reserves in addition to £27m from the capital account, giving a grand total of £106m being spent from reserves.
The budget also anticipated reserve income at £29m. This meant that the net impact would have been a reduction in reserves of £77m.
A medium term financial strategy was put in place which would see reliance on reserves reducing over time from £109m in 2016-17 to £54m by 2021-22.
But the actual position for 2015/16 was much better than anticipated due to a higher level of investment income and a lower capital spend.
Expenditure from the National Insurance Investment Account was £16m and from other reserves was £66m.
The investment income generated on the National Insurance Investment Account was £57m and on the other reserves £41m.
There was a net contribution to the capital fund of £2m.
This meant that the actual impact on reserves, excluding the MUA repayment Fund and the National Insurance Investment Account, was a decrease of £25m.
The National Insurance Investment Account increased by £41m.
Market value of externally managed funds and proportion held in cash as at the end of March this year was £1,458,833,000.
Other candidates standing in Douglas Central are Captain Kurt Buchholz, Ann Corlett, Sara Hackman, Michelle Inglis and Chris Thomas.