A TOP economist has said that Humza Yousaf’s announcement that the Scottish Government will take steps to issue its first-ever bonds should be “applauded”.
The First Minister made the announcement in his address to SNP conference and hopes that issuing the bonds will help to fund key infrastructure in Scotland.
Professor of accounting practice at Sheffield University Richard Murphy (below) described the move as “bold and brave”.
Outlining what it all means, Murphy said: “First of all, he’s thinking big. You just can’t be bothered to raise a bond for less than £200 million, maybe rather more.
“And so this is about putting a lot of money into the Scottish economy as a consequence of raising a bond.
“It’s also significant because what he’s saying is that Scotland can do this, independent of what Westminster is going to say and it can do it without independence.
“He’s making a bold statement about the credibility of Scotland as a country without first of all getting independence and I think that’s important, particularly important at a time when there are questions about how the route to independence might come about.
Delegates at SNP conference voted to treat winning a majority of Scottish seats at the next General Election as a mandate to open negotiations with the UK Government.
It marked a change from the original strategy proposed by the FM who had initially said the SNP should aim only to win the “most seats”.
Murphy added that issuing the bond was something “which requires a little bit of wisdom attached to it”.
Bonds are the standard form of borrowing for governments around the world on major infrastructure projects, with buyers owed the value of the bond plus interest over a specific period of time.
The Scotland Act 2016 devolved powers to Scotland to allow the issuing of bonds for capital investment.
“He’s got to raise money to pay the interest on this bond,” Murphy explained.
“How can he do that? Well by investing in social housing which of course is needed and which pays a return in the way of rent to cover the interest cost.
“And he can do this in particular by investing in green energy which we know Scotland has in abundance and which can also generate a return.
“Transport might in some cases also achieve the same result.”
Murphy added that it had to be “done well and done carefully” but that it was significant because “Scotland is thinking and acting for itself”.
“And for that reason I applaud this move. I just hope it’s done well.”
