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A Guide to the Public Finance Act (2005)

Financial Powers

Key Points

  • It is important that departments understand the limits of their powers. Actions or decisions that are ultra vires may be deemed invalid by the Courts.
  • Departments are prohibited from borrowing or investing (except from or within the Crown)– this includes entering into hire purchase agreements and finance leases.
  • The Act specifies the circumstances in which the Minister of Finance may issue securities.
  • Departments have limited authority to enter into derivative transactions in order to manage their foreign exchange risk.
  • Departments have limited authority to give guarantees and indemnities for transactions in the ordinary course of their operations (for example, computer services contracts, consulting contracts, insurance contracts and lease agreements).

Introduction

This Chapter outlines the requirements of Parts 6 and 7 of the Act and the implications of these requirements for departments. Topics addressed include borrowing, the issuing of securities, derivative transactions, guarantees and indemnities, trust money, unclaimed money and banking.

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