HIGH EXCHANGE.

Auckland Star, Volume LXIV, Issue 289, 7 December 1933, Page 10

HIGH EXCHANGE.

COSTS SHOWN.

AUDITOR-GENERAL'S ANALYSIS HUGE TRANSACTIONS. (By Telegraph.—Parliamentary Reporter.) WELLINGTON, this day. The exchange transactions of the New Zealand Government, involving £19,011,644 between the date of the institution of the policy early in January and September 30 have resulted in a lass in interest on this amount of about 4 per cent, according to the annual report to Parliament of the Controller and Auditor-General, Colonel G. F.'C. Campbell. The average rate of interest on • Treasury bills issued to provide for tlie, purchase of exchange has been over I'ft percent, while the rate of interest received on deposits of exchange moneys in London has averaged considerably lesa than 1 per cent.

The workings of the high exchange policy are set out in the report. It is shown the total amount provided for the purchase or exchange since the Banks Indemnity (Exchange) Act came into operation ha* been £19,011,<544, of this £17,881,25(3 has been provided by the I issue of Treasury bills, and only £1,130,1288 from other sources. The amount I paid to the banks for the purchase of isurplus exchange wau £15,255,000; while I exchange paid to the banks on surplus exchange amounted to £3,756,544. The amount of discount on Treasury bills 'issued under the Act amounted to |£29(i,844, making the total expenditure incurred under the Act £19,308,428. The amount of surplus exchange paid into the New Zealand Government indemnity I exchange account, London, amounted to I £15,255,000. alKl a li but £1,000,000 of this 'was transferred to the New Zealand Government account, London.

; At September 30 the amount of Treasury billrf outstanding on account of exchange had been reduced from £17,851,206-' to £11,014,597, bills to the amount of £0,866,059 having been redeemed partly from th& proceeds of other Treasury bills issued in anticipation of revenue and partly from revenue. Although, at September 30, £14.255,000 surplus exchange had been credited to the ordinary revenue account of the Consolidated Fund, a balance of £8,354,000 then remained in this account. This showed that £5,900,000 of the exchange credits had been, used to meet ordinary revenue account charges in London and New Zealand. The Auditor-Oeneral quotes an actual case to show the great increase in cost to the New Zealand Government arising from exchange in connection with overseas pavments. The. nominal amount of interest payable in New York on a 51 per cent loan of £1,000,000 _ was £27.500. The amount actually paid in sterling in London to produce the requisite value in dollars in New York was £39,373, and the total cost to the Dominion worked out at £49.216, the additional amount of £21,716 representin? the cost of exchange between Wellington, London and New York.