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Council who borrowed £1.5m from another district to repay loan

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Councillor Thomas O'Reilly

Councillor Thomas O'Reilly

Councillor Thomas O'Reilly

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

It comes as the meeting to strike the rate for the coming financial year approaches.

It will be welcomed by at least one councillor who previously remarked that £1.5m 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 £3.7m and reserves including a combined total of £6m loaned out to other councils.

Sinn Fein councillor Thomas O'Reilly asked if funds had been loaned to other councils.

The practice is said to be common among local authorities, with a spokesman 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 £4.5m has been loaned to Armagh City, Banbridge and Craigavon Borough Council, as well as £1.5m to Antrim and Newtownabbey Borough Council, "repayable on demand" if needed.

Councillor O'Reilly said: "I'm delighted if we need to use £1.5m to, for instance, subsidise our rates this year, we could call that loan to another council back in."

Fermanagh and Omagh District Council was asked when the loans were supplied; if councillors were aware and who signed each off.

A spokesman replied: "Lending to other councils on a short-term basis is permitted by the Council's Treasury Management Policy and is a fairly routine practise which has been fully verified by financial advisors."

Current loan arrangements are:

  • Armagh City, Banbridge and Craigavon - £4.5m, at an interest rate of 0.15%. The loan, agreed on October 8 2020, to be repaid on July 17 2021, and;
  • Antrim and Newtownabbey - £1.5m, at an interest rate of 0.10%, agreed on November 27 2020 to be repaid on March 31 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 2020/21 approved by the Council in February 2020."

Both councils were asked to provide the reasoning for their respective loans. A spokesperson for Antrim and Newtownabbey said: "We entered into commercial terms with Fermanagh and Omagh District Council for this loan that would see funds due for repayment on 31 March 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."

Belfast Telegraph


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