Borrowing powers, amounts, institutions and interest rates: FOI release

FOI reference: FOI/17/02702
Date received: 8 November 2017
Date responded: 29 November 2017

Information requested

Asking if the Scottish Government is able to borrow money and, if so, which institutions can be borrowed from and the interest rate paid currently.

I can confirm that the Scotland Act 2012 gave borrowing powers to the Scottish Government, and which were extended by the Scotland Act 2016. Under the Scotland Act 2016 the following limits have been agreed:

• the total, aggregate capital borrowing cap will increase to £3 billion (from £2.2 billion); and

• the annual limit will be increased to 15% of the overall capital borrowing cap (£450 million).

Response

The Scottish Government is able to borrow from the National Loans Fund, from banks on commercial terms or through issuing bonds. We are evaluating these options for borrowing and will in due course take a responsible decision on which method or methods to use based on the prevailing economic conditions.

The 2017-18 Draft Budget set out the intention to borrow £450 million to support the Scottish Government's capital investment programme in 2017-18, with the repayment anticipated to be based on appropriate value for money considerations at the time of drawdown, on the basis of repayment of the debt over 10 years.

At present, the Scottish Government has not yet borrowed. We would expect to take decisions about future borrowing routes later in 2017-18, on the basis that we would plan only to draw down required borrowing towards the end of the financial year to minimise interest costs.

The Scotland Act 2016 also increased the level of revenue borrowing available to the Scottish Government to an annual limit for revenue borrowing for forecast errors of £300 million (from £200 million under Scotland Act 2012). The annual limit for borrowing for forecast and economic shocks will increase to £600 million during the financial years of a Scotland-specific economic shock, triggered when onshore Scottish GDP growth is below 1% in absolute terms on a rolling 4 quarter on 4 quarter basis, and 1% below UK GDP growth over the same period.

Revenue borrowing is subject to an overall debt limit of £1.75 billion (increased from £500 million under Scotland Act 2012), with a flexible repayment period of between 3 and 5 years, decided by Scottish Ministers (previously 4 years under Scotland Act 2012).

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