5
The Committee received the report of the Leader of the Council and Cabinet Member with responsibility for Resources which set out the East Suffolk Council’s Treasury Management Strategy Statement for 2020/21 and the Investment Strategy for 2020/21.
The Assistant Cabinet Member for Resources stated that the report covered:
- the current treasury position;
- treasury indicators which limit the treasury risk and activities of the Council;
- prospects for interest rates;
- the borrowing strategy; and
- the investment strategy.
It was explained that the Treasury Management Strategy Statement provided Members with details of the economic background that the Council has been operating in and the credit outlook and interest rate forecast. The Treasury Management Indicators helped the Council to measure and manage its exposure to treasury management risks. The indicators covered:
- security;
- liquidity;
- interest rate exposure;
- maturity structure of borrowing;
- principal sums invested for periods longer than one year;
- ·operational boundary for external debt; and
- authorised limit for external debt.
The Assistant Cabinet Member referred to Annex A of the Treasury Management Strategy Statement which provided Members with Arlingclose’s economic and interest rate forecast as at November 2019. It was noted that, as at 30 November 2019, the Council held £77.41m of borrowing and £120.82m of investments and reference was made to Annex B of the report which provided a further breakdown.
The Committee was informed that the Investment Strategy provided Members with details on treasury management investments and commercial investments. It also provided detail on capacity, skills and culture that operated within the Council and detailed the investment indicators that operated:
- total risk exposure;
- how investments are funded; and
- rate of return received.
The Assistant Cabinet Member concluded that the report highlighted the positive aspects by earning money through Treasury Management and also detailed the risks involved.
A query was raised as to whether there was likely to be any impact on the Council now that a new Bank of England Governor had been appointed. The Assistant Cabinet Member indicated that it was too early to say yet but he pointed out that Arlingclose would continue to give advice on anything that would impact on the Council.
Reference was made to Table 1 of the Treasury Management Strategy Statement which listed the approved investment counterparties and principal limits and the Chairman suggested that, in future, further detail should be provided on those institutions with credit ratings above AA- that the Council currently use or could use. The point was made that institutions did move between the bandings but it was acknowledged that it was unlikely the Council would use any that had a rating below AA-.
The Assistant Cabinet Member referred Members’ attention to an error in the recommendation in the report and explained that the documents did not need to be considered by Cabinet but, if approved by this Committee, would go straight to Full Council.
On the proposition of Councillor Back, seconded by Councillor Cloke it was
RESOLVED
That the Treasury Management Strategy Statement and the Treasury Management Investment Strategy for 2020/21 be recommended to Full Council for approval.