MercoPress. South Atlantic News Agency

Falklands adjusts Government Reserves Policy to 1,5 times (from 2,5) departmental operating expenditure

FIG is committed to maintaining a vibrant and sustainable economy and a high standard of public services. Prudent fiscal and economic management are central to these objectives.

Following the sitting of the Executive Council on Wednesday 10 May, a paper was approved to update the Government’s Reserves Policy to hold 1.5 times adjusted departmental operating expenditure in unrestricted reserves.

The Falkland Islands Government is committed to maintaining a vibrant and sustainable economy and a high standard of public services. Prudent fiscal and economic management are central to these objectives.

In determining the most appropriate level of unrestricted reserves to hold, a range of potential risks and magnitude of impact on FIG revenues across a number of scenarios were considered.

In the event of short term lost revenues (or exceptional unplanned expenditure) the reserves policy enables existing levels of operating expenditure to be met without making substantial changes to activity and services i.e. 1-2 years impact.

In the event of longer term sustained reductions to revenues (or more substantial exceptional unplanned expenditure) the reserves policy provides the breathing space (i.e. 2-3 years) to allow reviews of expenditure and service delivery to enable longer term expenditure savings to be realised to meet sustained reductions in revenue.

The reserves policy will continue to be expressed as a multiple of departmental operating expenditure (adjusted for internal recharges or costs recovered from fees and charges) as this is a clear and understandable basis for measurement.

MLA Roger Spink, Government Service, Legal and Regulatory portfolio holder, said: “The change to this policy will naturally cause some anxiety in the community. I want to provide reassurance that the decision to make this change is based on very clear evidence and various scenario planning. We have been unable to find any documentation as to why the reserves policy was set at 2.5, however, we have learnt a great deal from COVID-19 and the current global market to be assured that we can lower the policy and still be able to sustain our current and future way of working.”

There will be a Budget specific Public Meeting in the Town Hall on 5 June 2023 with MLAs and the Financial Secretary. During the presentation there will be a dedicated section on the update to the Reserves Policy.