The Treasury Management Strategy supports the council in meeting its requirement to operate a balanced budget. This broadly means that cash raised during the year will meet cash expenditure. Part of the treasury management operation is to ensure that this cash flow is adequately planned, with cash being available when it is needed. Surplus monies are invested in low risk counterparties or instruments commensurate with the council's low risk appetite (security is paramount). This provides adequate liquidity initially before considering investment return.
The 2nd main function of the treasury management operation is the funding of the council's capital plans. These capital plans provide a guide to the borrowing need of the council, essentially the longer term cash flow planning to ensure that the council can meet its capital spending obligations.
The main strategic objectives of the Treasury Management Strategy are:
- To effectively manage and control the risks associated with treasury management activities giving regard to the Code, and all relevant legislation, criteria and limits set within this report.
- To ensure that sufficient cash is available to enable the council to discharge its financial obligations when they become due.
- To undertake all borrowing at or below budgeted rates on the basis of best value, and also seek opportunities to reduce the cost of servicing existing debt.
- To minimise the cost of any temporary borrowing (which is required for day to day cash flow reasons).
- To invest prudently having regard to the security and liquidity of Investments and the predictability of returns.
- To aim to achieve the optimum return on investments commensurate with proper levels of security and liquidity.