THE Scottish Greens have called on the First Minister to halt plans to issue Scottish Government bonds, arguing they risk being a “gimmick” that creates a new barrier to independence.
The Scottish Government is preparing a £1.5 billion bond programme, with the first issuance expected in late 2026 or early 2027.
Last week it confirmed the nine major banks appointed to advise on the framework for the bond scheme, including HSBC, Merrill Lynch International and Barclays.
Deputy First Minister Jenny Gilruth said funding raised from the bonds will “help support delivery of the capital infrastructure projects outlined in the spending review, while allowing the Scottish Government to diversify its borrowing”.
She continued: “Bonds are a standard form of borrowing for governments around the world.”
However, Scottish Greens co-leader Ross Greer has called on the the Government to drop the scheme, saying it should instead borrow from existing routes that are “cheaper and lower risk”.
Greer’s party pointed to warnings from some economists that bonds would be a more expensive way of raising money than regular borrowing through the National Loans Fund, which offers low-cost loans to public bodies.
The party said fund managers had warned the Government to avoid long-term bonds due to the prospect of constitutional change pushing up the cost of Scottish debt.
But it also said the short term bonds recommended by fund managers would put more financial pressure on the Government over the next five to 10 years, when the public finances are expected to be under pressure.
The Greens added that since the UK Government sets “strict limits” on the total amount that can be borrowed by the Scottish Government, issuing bonds would not increase the funding available to it.
Bonds, they said, would only change the source of those funds, and the cost of repaying those debts.
Greer said: “Scotland needs investment in homes, bus and rail services, schools and hospitals.
“Governments borrowing to build this kind of infrastructure makes total economic sense, but these bonds are not the way to do that.
“The Scottish Government can borrow through existing routes which are cheaper and lower risk.
“Why would the SNP choose to issue expensive bonds instead, especially when they put another barrier in the way of Scottish independence?”
He said borrowing to build infrastructure is “essential” – but that the Government should use its “regular borrowing powers” to do so.
“Scotland’s public finances are under huge pressure right now. The answer to that challenge must include serious investment plans from the Scottish Government, not risky gimmicks like this,” he said.
Greer also warned about the impact of the scheme on any future independence campaign, saying it would give unionist parties “a reason to cast doubt on our prospects of success as an independent nation”.
He added: “The case for independence must be credible, serious and focused on how we can improve people’s lives with the full powers of a normal nation.
“Why risk undermining that with an unnecessary and expensive bond scheme that will be used against us ahead of the next referendum?”
Gilruth said: “The Scottish Government’s bond programme is underpinned by high investment grade credit ratings from two global credit rating agencies.
“These are an endorsement of the strength of the Scottish economy and efforts we are making to drive that forward.”
