DEBT MATURING IN LONDON

Press, Volume LXXIV, Issue 22436, 24 June 1938, Page 10

DEBT MATURING IN LONDON

SUM OF £17,000,000 INVOLVED HEAVY TASK FOR NEXT GOVERNMENT SPECULATION OVER PLANS FOB MEETING SITUATION More than £17,000,000 of New Zealand’s public debt will mature in London during the next financial year, and financial circles are interested to see what methods the Government will adopt to make the repayment. The total amount due is £ 17,173,191, and between April 1, 1939, and March 31,1940, some means Will have to be found to meet the debt, whatever government holds office.

The present Government has been reported to have some special plans in view for dealing with the situation, but it appears to be generally accepted that either a conversion loan will be floated in London to make the repayment or an attempt will be made to use the financial resources of the country, through the Reserve Bank of New Zealand, to pay the amount off in London and transfer the indebtedness to the Dominion. This apparently would be done either by a major credit issue along the lines of the loan made by the bank for State housing, or by the ftoating of an internal loan here.

-London Hint There was a significant reference to the possibility of a big conversion in London in a cabled message received from London last week, when the “Financial News,” discussing the fall in New Zealand stocks, said, inter alia: “Mr Savage should, however, remember that unless New Zealand credit improves before January, 1940, he may have to pay dearly for conversion.” It is considered in some well-informed quarters in New Zealand that because of the uncertainty of the position in London, the Government (if this present Government has the task) may decide to meet the repayment by some internal arrangement, such as suggested. This £17,000,000 due in London, as huge a figure as it may seem, is only a very small part of New Zealand’s heavy public indebtedness. At the end of the 1937 financial year, the gross indebtedness of the general Government stood at £287,670,200. This represented an increase of no less than £5,109,202. An immediate discharge of this total indebtedness would represent a call on every person in the Dominion to the extent of £lßl 4s 10<L The per capita debt has increased from £162 12s 9d in 1920 to that figure—£lßl 4s lOd. On their indebtedness thp people of New Zealand pay a gross annual interest charge, as at March 31, 1937, of £11,114,997. During the last 20 years the actual net interest payments under our debt obligations have risen from £3 8s 4d a bead annually to £4 16s 4d in 1937. AU Due by 1972 Of the £287,670,200 owing by New Zealanders, nearly £157,000,000 is owing in London ,nd is actually due for total repayment by 1972, the last year for periodic repayment or conversion. That is, between the present time and 1972, in varying amounts maturing at different times, the whole of our present gross indebtedness must be paid back or arranged for in some way. It is interesting to realise that these commitments include old debts reaching far back into the last century. Old provincial liabilities, are still being paid for, for instance, and the total debt includes a sum of more than £2,000,000 for revenue deficiencies incurred before 1893. War and defence commitments make up by far the biggest individual item in the list of liabilities. Railways come a good second, with State advances and roads and highways the other two major figures. The full table of the most important items of indebtedness is given below:

Railways .. .. 61,992,417 Hydro-electric schemes .. 13,905,509 Post and Telegraph - .. 13,775,637 Public buildings, schools, etc. ... .. 14,023.324 Hoads and highways .. 29,109.676 Harbours and lighthouses State forests' .. 2,072,697 State advances .. .. 40,659,160 Land settlement and improvement .. .. 25,884,821 Shares in Reserve Bank .. 1.626,081 Investment in State Advances Corporation .. 1,031,708 Immigration .. .. 3,317,632 War and defence .. 69,502,430 Revenue deficienees before 1893 .. .. 2,216 i 856 The above figures do not include any items falling below £1,000,000, such as the totals for tourist development, old provincial liabilities, dedevelopment of mining, and shares In Bank of New Zealand. Maturity of Big Sums The following table shows the dates and amounts of the major items of indebtedness maturing during the next 10 years:— Total Year. £ 1939-40 .. .. 17,173,191 1939-43 .. .. 13,678,215 1942-46 .. .. 92211.470 1945-46 .. .. 22,543.590 1947-48 .. .. 11.221,609 With the exceptions of the 1939-43 and 1942-46 amounts, the other totals fall due for maturity in London. The remaining two mature in New Zealand. It is obvious from this table that hot only the next Government, but successive Governments, will for some years have to deal with the frequently awkward task of meeting calls fror London for huge sums.