LOAN REDEMPTION.

Auckland Star, Volume LXI, Issue 262, 5 November 1930, Page 6

LOAN REDEMPTION.

The statement by the acting-Prime Minister about the recent redemption of loans contains a fresh illustration of the financial difficulties of the Government. A total of over six millions had to be redeemed, of which nearly five millions were free of income tax securities issued at 4J per cent. The other securities were at 5 and per cent. In all cases holders were asked to accept 5£ per cent scrip, subject to income tax., The response was poor, for only £1,700,000 was renewed by the original holders, and the Government had to make up the balance out of redemption funds, reparations, capital moneys available in separate accounts, proceeds of the present issue of 5£ per cent securities, and temporary transfers from Treasury accounts. These temporary loans are to be replaced by 5-| per cent money as it comes in. The replacing of tax-free with taxable securities was a sound move, but unfortunately this year's . increase in taxation reduced the rate of interest to the big investor, and consequently made him shy of accepting the "Government's offer. The Government's proper determination to balance the Budget has thus made its loan financing more difficult.