Administration of Liquidity and Debt

The Faroe Islands Governmental Bank administers the liquidity of the country. The key objectives of the Governmental Bank are 1) to ensure that the country always has sufficient liquidity available, and 2) to secure a reasonable return on investment without undue risk. The country shall maintain an available minimum liquidity of 15% of GDP. The purpose is to ensure the continued operation of the country in the event that the revenue of the National Treasury weakens.

The Governmental Bank also administers the debt of the country, which entails the preparation of loan facilities and the administration of loan repayments. The loan facilities are undertaken at the lowest possible rate of interest and with a focus on the risks inherent in refinancing and the constraints of maintaining a minimum level of liquidity.

The credit risk of the Faroe Islands is assessed by the investor services company, Moody’s, and consequently the goal of the Governmental Bank is to continuously pay down debt consistent with the Bank’s credit risk rating. The Governmental Bank quickly responds to the various requests stipulated by the rating agency and deemed necessary to conduct its rating of the Faroe Islands.