A PLAN to boost a government reserve fund to safeguard against future economic crises will be put in place, if a proposal from a backbencher is approved by the States.
Deputy Max Andrews has lodged a proposition calling for the Treasury Minister to develop a long-term plan to increase the value of the Strategic Reserve to a minimum of 30% of the Island’s GVA – a measure of the value of goods and services produced in the Island.
The plan, he says, should be implemented no later than January 2026.
Last year, the Fiscal Policy Panel – a group of independent experts who advise the government on economic issues – raised concerns that the value of the Strategic Reserve, also known as the rainy day fund, was “unlikely to be sufficient to meet a major crisis”.
The FPP said the fund should be valued at between 30% and 60% of GVA and should sit at between £2,900 million and £4,300 million by 2027.
The current forecast is for a balance of £1,206 million, or 17% of GVA.
In the report accompanying the proposition, Deputy Andrews said: “The sustainability of the fund has not been helped by consecutive Council of Ministers prioritising growth bids which has led to public sector expansion over making necessary transfers to the reserve funds.
“To address these concerns, the government will need to maintain a public sector surplus for future years, to ensure surplus funds can be transferred to the fund, to increase the fund value.
“The government should also consider reducing government expenditure too. By reducing government expenditure, it means more funds can be made available to be transferred to the fund.”
