Issue - meetings

Members considered the Draft Mid-Year Treasury Report 2020/2021.

The key points were:

·         Covid-19 and Brexit continued to have an adverse impact on the economy and interest rates remained low.  As a consequence, this impacted on the authority’s investment return;

·         Slippage on capital schemes had resulted in a reduction on the capital financing requirement, or the underlying need to borrow.  This was mainly due to investment property acquisitions being placed on hold, and the re-phasing of the depot scheme;

·         The authority was holding around £19 million of investments on a monthly basis, in part due to the holding of government grants;

·         It was likely that by the end of February 2021 an extra £3million would be borrowed and added to the current £20 million of external borrowing.  Internal borrowing would be approximately £16.5 million at financial year end.  This meant that the anticipated borrowing for the authority overall was around £40 million.

One Member asked a question regarding potential negative interest rates, the response was as follows:

·         The current bank to the authority would not apply negative interest rates to investments made.  It would have a negative impact on money markets, and interest rates would drop substantially.  It was unlikely to witness an impact whereby the authority would pay banks to hold money, but an increase in costs on banking provision was possible.  Rather than accepting negative interest from money market funds, the authority would likely favour intra-authority borrowing.

Internal borrowing had not changed in this financial year.  Cashflow already taken into account meant borrowing of £3 million, £500,000 of which was to pay back previous internal borrowing.

The paper was moved, seconded, and following a vote it was RESOLVED to note the report, the treasury activity and recommend approval of any changes to the prudential indicators to Full Council.