A LOCAL authority which borrowed £1.5 million from Fermanagh and Omagh District Council is scheduled to repay the funds on March 31, it has been confirmed.

As the meeting to strike the rate for the coming financial year approaches, at least one councillor will be pleased, having previously remarked £1.5 million would be useful to “for instance, subsidise our rates this year”.

Last week, members were provided with the Council’s financial position at the end of the third quarter of the financial year, which indicates a budget surplus of £3.7 million and reserves including a combined total of £6 million loaned out to other councils.

These details were disclosed after Sinn Fein Councillor Thomas O’Reilly enquired if funds had been loaned to other councils.

The practice is said to be common among local authorities, with a spokeperson for one of the borrowers contending it “allows any commercial return to be earned on behalf of ratepayers, and for those monies to be invested into public services”.

It transpired £4.5 million has been loaned to Armagh Banbridge and Craigavon Borough Council, as well as £1.5 million to Antrim and Newtownabbey Borough Council as “repayable on demand” if needed.

Councillor O’Reilly remarked: “I’m delighted if we need to use £1.5 million to, for instance, subsidise our rates this year, we could call that loan to another council back in.”

When loans were supplied

Fermanagh and Omagh District Council was asked when the loans were supplied, and if councillors were aware at the time of actioning.

The job title of the council official who signed off each loan was also requested.

A Council spokesperson replied: “Lending to other councils on a short-term basis is permitted by the Council’s Treasury Management Policy, and is a fairly routine practice which has been fully verified by financial advisors.”

Current loan arrangements are as follows:

Armagh City, Banbridge and Craigavon – £4.5m; interest rate – 0.15 per cent; Loan Agreement date – 08/10/2020; value date – 14/10/2020; redemption date – 14/07/2021.

Antrim and Newtownabbey – £1.5m; interest rate – 0.10 per cent; Loan Agreement date – 27/11/2020; value date – 27/11/2020; redemption date – 31/03/2021.

The response continued: “All councillors are aware of these loan arrangements which were entered into in line with the Council’s Annual Investment Strategy, which is included in the Council’s Treasury Management Policy and Treasury Management Strategy for 2020/2, [as] approved by the Council in February, 2020.

“In addition, these loans are reported to the Council every three months through the Policy and Resources Committee main business section.

“The loan arrangements – which are all short-term, and related to cashflow management – were signed by the Chief Executive Officer as Chief Financial Officer of the Council, in line with Section Four of the Treasury Management policy.”

Meanwhile, both councils were asked to provide the reasoning for their respective loans, and when they intend to repay.

A spokesperson for Antrim and Newtownabbey said: “Lending and borrowing between councils is common practice across all local authorities and is considered a prudent part of a broader treasury management strategy, to ensure cashflow and minimise risk.

“It allows any commercial return to be earned on behalf of ratepayers, and for those monies to be invested into public services.

“We entered into commercial terms with Fermanagh and Omagh District Council for this loan that would see funds due for repayment on March 31, 2021.”

A spokesperson for Armagh City, Banbridge and Craigavon said: “This is a short-term loan agreed as part of the Council’s Borrowing Strategy to fund capital expenditure, and is in line with our Treasury Management Strategy.

“Capital expenditure is financed, either from external sources – government grants and other contributions – and the Council’s own resources – such as revenue, reserves and capital receipts – or debt, such as short- or long-term loans.

“The Council’s Borrowing Strategy continues to address the key issue of affordability without compromising the longer-term stability of the debt portfolio.”