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State of the Treasury: Steady Growth in Challenging Economy

Half-year investment receipts total $46.1 million

Little Rock, Ark. – Receipts from the state’s $4.5 billion investment portfolio totaled $23.4 million during the second quarter of fiscal year 2020, bringing the half-year total to $46.1 million, Treasurer of State Dennis Milligan told the State Board of Finance recently. While the economy is challenging for investors, Arkansas’s current half-year total is nearly equal to what the Treasury earned in all four quarters of fiscal 2016.

“The Federal Open Market Committee is currently holding interest rates steady and has provided a lot of liquidity in the market, which would normally lead to economic stability,” Milligan said. “However, amid the impeachment hearings, the tension between the U.S. and Iran, as well as other current geo-political events, investors are on guard.”

In comparison to previous years, investment receipts were $35.6 million at this same point in fiscal 2018, and $53.9 million at the same time in fiscal 2019.

“We’re trending roughly in between where we were at this time in FY 18 and FY 19,” Milligan told the Board, adding that interest rates in 2018 were higher on average than they have been during fiscal 2020.

“We’re holding our own, so to speak,” he said.

The State Treasury is statutorily limited to investing in only fixed-income securities (in order to be able to meet the Board of Finance’s top priorities of safety and liquidity of investments). The Treasury is responsible for providing the funds the state needs to pay its bills.

“I think we have a unique opportunity to diversify the state’s investment portfolio and produce steady results that can be relied upon in both good and bad economic times,” Milligan said, adding that he expects his investment team to “ensure the investments of the state are sound and secure in a fixed-income world.”

“We also have an obligation to make sure the investment department of the State Treasury is running in the most professional manner and is as close to industry standards as possible.”

Fiscal year 2020 runs from July 1, 2019, through June 30, 2020.

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