05/2017: 2017/18 Minimum Revenue Provision Strategy

Details

This is a Decision Notice outlining the Commissioner’s Minimum Revenue Provision Strategy for 2017/18.

Minimum Revenue Provision (MRP) is the annual revenue provision that Commissioners have to make in respect of their debts and credit liabilities. Legislation requires approval of the strategy from the Commissioner on an annual basis. The MRP strategy complements the wider financial picture which aims to provide transparency on the cost to the Commissioner of taking on new borrowing, therefore linking into the Commissioner’s prudential indicators and the overall management of the Commissioner’s assets.

Four options are outlined within the regulations for Commissioner’s to follow as to the calculation of MRP, however there are certain factors which predetermine the option the Commissioner must adhere to, depending on the timing of the borrowing (that is before or after the 1st April 2008) and whether the borrowing is supported or unsupported.

Based on the options available to the Commissioner, and in line with the Strategy for 2016/17, it is recommended, by the Commissioners Chief Finance Officer, that the Commissioner adopts the following options in relation to the MRP Strategy for 2017/18:

• Option 2 (“Capital Financing Requirement Method”) be used to calculate the MRP on any future supported borrowing (after 1^st April 2008).
• Option 3 (“Asset Life Method”) be used to calculate the MRP in the case of any future unsupported borrowing (after the 1^st April 2008).