DETAILS OF NEW LOAN

Press, Volume LXXXVI, Issue 26199, 24 August 1950, Page 7

DETAILS OF NEW LOAN

International Bank Decision

CAPITAL GOODS AND EQUIPMENT

WASHINGTON, AUgust 22. > The International Bank announced to-day a 100,1)00,000-dollar loan to the Australian Government. The bank stated that it also indicated to Australia tnai it was Willing, in ptihCiple, to participate oVer the next five years in further financing Australian development. The loan will be used for capital goods and equipment lor development projects, both private and Governmental, oVer the nekt two years. The loan is for a term of 25 years. It dairies interest at the rate of 3i per cent., plus commission .of 1 per cent. Amortisation payments, will begin on September 1.

The loan agreement was signed today by tne Australian Ambassddbf (Mr Norman Makin) and the president. of the bank (Mr EUgene Black). The agreement ended the shortest loan, negotiations in the bank’s histdfy. They were opened by the Prime Minister (Mr R. G. Menzies) qn AdguSt 2, - the day before he left Washington, and have been continued by staff experts who have been travelling «With him. Mr Black told correspondents that the bank proposed to send a mission to Australia in Obtofier io disbUSs. Australia’s development plens and determine the extent tri which the bank can participate ih the full five years* pro-gi-artime. Help in Purchases The bank’s ahnouheement stated that the loan would help to finance the purchase of agricultural equipment, coal and non-ferrous metal, mining ffiaehiriaty, smeltihg ahd refinery plant for iron and steel production, ahd a broad range of othet industries. It wanted also tb assist in the development of water conservation, hydroelectric powet- facilities, road ahd riskil transport, housing, and public utilities. The announcement stated that the programme should add substantially to Australia’s productive capacity ana strengthen the long-run balance of payments position. Australia, it added, needed an inflow of dollar capital to finance part of this development. The increasing availability xof capital goods in soft currency areas was enabling Australia to increase her imports from those areas, but many goods requirec for the development programme coulc still be obtained only in North America. Because of the sterling area’s dollar shortage Australia’s on'.y means of obtaining additional dollar imports essential for her programme was by bofroWinfe abroad, added the bank’s announcement.

The loan Vmuld be used for specific purposes which had been agreed on between the bank and the Commonwealth Government. The major part woUlti be used by farmers and business concerns. They include the nurchase of specialised agricultural machinery and equipment to increase farm mechanisation, promote rribfe intensive OUltivavation, and make possible the introduction of the latest agricultural techniques.

The bank stated that about onequarter of the loan would be used for urgently heeded items of capital equipment for a wide Variety of manufacturing ihduSttiefe. The hank noted that Australia had always honoured her financial obligations abroad, and her credit standing was weil established.