Significant Issues and Future Outlook
Western Australian Treasury Corporation must remain flexible and adaptable to respond to the ever-changing economic environment to deliver the financial requirements of the State.
General global uncertainty and international events will continue to impact the domestic economy. Geo-political events, including ongoing Brexit negotiations and tensions with North Korea, along with the Federal Reserve’s hiking cycle and the prospects of emerging market economies, such as China, will have a major influence on financial markets. Despite these uncertainties, they are not expected to materially impact Western Australian Treasury Corporation (WATC) and its ability to deliver the ongoing financial requirements of the State.
Budget for 2017/18
| $’000 | |
| Income | |
| Interest on Investments | 52,500 |
| Interest from Authorities | 1,661,513 |
| Fee Income | 1,728 |
| 1,715,741 | |
| Expenses | |
| Interest on Borrowings | 1,662,529 |
| Depreciation/Amortisation | 970 |
| Borrowing Related Expenses | 4,303 |
| Administration Expenses | 17,346 |
| 1,685,148 | |
| Profit before Income Tax Equivalent | 30,593 |
| Income Tax Equivalent Expense | 9,178 |
| Profit for the Period | 21,415 |
Estimated Borrowing Program for 2017/18
The sourcing of WATC’s funding is subject to conditions in the various markets and the market mix during the year may be amended as necessary to meet WATC’s pricing, liquidity, lending and capital usage targets.
The figures in the following table are based on the projected 2017/18 Borrowing Program that was set in the May 2016 release of the 2016/17 State Budget. With a State election held in March 2017, the 2017/18 State Budget will be released on 7 September 2017. The new 2017/18 Borrowing Program will be updated on the WATC website at that time.
Estimated Term Debt Borrowing Program for 2017/181
| $m | $m | |
| Term Funding Requirement | ||
| New Lending to Clients | 4,900 | |
| Less: Pre-funding | (1,000) | |
| Projected Maturities | ||
| Bonds | 2,045 | |
| FRNs | 3,265 | 5,310 |
| Total Term Funding Requirement | 9,210 |
1 Based on the projected 2017/18 Borrowing Program set in the May 2016 release of the 2016/17 State Budget.
Borrowing Strategy for 2017/18
In order to meet the State’s funding and debt management requirements for 2017/18, WATC plans to:
In addition, WATC will continue to:
- supporting these securities in the market
- issuing through its Fixed Interest Market Making Panel, by tender, private placement or syndication
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