Rainy day fund used to finance deficit
The finance minister today signalled that a special fund created as the Government’s piggy bank would be used to cover a Budget deficit.
Curtis Dickinson, the finance minister, said the Government expected to be short by $124.5 million in the 2021/22 financial year.
Mr Dickinson added the Sinking Fund’s balance would be about $349 million at the end of this financial year.
He insisted as he delivered the Budget statement that more Government borrowing was off the table and that the Sinking Fund would be used to cover the deficit.
The fund was established in 1993, when the late David Saul, then the finance minister, set it up as a long term fund to be used to pay off the principal of the island’s debt, rather than the interest.
The aim was to pay in an annual sum equivalent to 2.5 per cent of the public debt at the end of the previous year.
The deposit was mandatory, although the payments into the fund were suspended in 2019 – when the Government still expected a budget surplus for 2020.
Heavier taxation was ruled out – which meant a raid on the pot of cash known as the Government Borrowing Sinking Fund.