Council / SIC ‘weathering storm’ at the moment with value of reserves
SHETLAND Islands Council (SIC) is “weathering a bit of a storm” at the moment regarding the value of its reserves.
Finance manager Paul Fraser told a meeting of the full council on Wednesday that he expects by the end of the financial year the value of reserves will be less than it was at the start of the year.
He said at the end of January the reserves – which are invested in the market in a bid to make gains – were valued at £403 million, before dropping to £392 million come the end of February.
Fraser predicts that figure will have fallen further, and that come the end of the 2024/25 financial year it is likely to be less than the £387 million value at the start of the year.
At a recent meeting the finance chief said challenges in the US financial market was affecting the value of investments.
The stock market there had been negatively impacted by president Donald Trump announcing increased tariffs on imported goods, he said.
However, Fraser told elected members on Wednesday that rises and falls in values is to be expected.
“This is not off the cliff reductions, but clearly against a period of time where we had seen a couple of months of growth, we’ve seen a couple of months now of fairly dramatic decreases, as we would expect,” he said.
“From time to time we will see these sorts of shocks, but it is always that important point that members have done nothing different, and sometimes it goes well and sometimes it goes badly, so at the moment we’re kind of weathering a bit of a storm.”
The council dips into its reserves, which were built up using revenue from the oil industry dating back to the 1970s, to balance its budget.
Some of this is deemed a sustainable use of reserves, and some unsustainable.
It is expected that the SIC will need an “unsustainable” draw of more than £20 million from its reserves in 2025/26.
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