DOLLAR LOAN FOR N.Z.

Press, Volume LXXXIX, Issue 27147, 17 September 1953, Page 8

DOLLAR LOAN FOR N.Z.

Condition Set By U.S. Treasury

LONDON PRESS REPORT (Special Correspondent N.Z.P.A.) (Rec. U djb.) LONDON, September 16. “The United States National Advisory Connell will today take a signifieant and symbolic decision on Government oveiweas lending policy,” says the Washington correspondent of the “Financial Times.” “Immediately at stake is an ExportImport Bank loan of up to 20,000,000 dollars to New Zealand. But in a broader sense, the issue involved is a fundamental one of how far the United States Treasury’s crackdown on Government lending activities is to be carried. “Ihe question to be resolved is -whether the Export-Import Bank snotild make a loan to New Zealand and'then seek to sell New Zealand’s note with the bank’s guarantee to private lenders; or whether it should make the granting of the loan conditional on first receiving a commitment from private lenders that they will buy the note if. and when the loan is made. **3316 council’s decision will be madp against a background that includes the Eisenhower Administration’s strong determination to hold Export-Import Bank lending to a minimum for budgetary reasons. “New Zealand is eligible for a loan by Administration standards because she is not a member of the World Bank. She asked for 15,000,000 to 18.000,000 dollars to finance the dollar costs of an 85,000,000 dollar lumber, pulp and paper mill project—ls,ooo,ooo to 18,000,000 dollars if the funds can be spent only in the United States, but 20,000,000 dollars if part of the proceeds can be used to buy equipment obtainable in Canada.

State Department’s Proposals “In an effort to maintain ExportImport Bank loans at a reasonably high level, the State Department recently developed a two-fold position. First, it proposed that future loans in any event would not go below the amount that can be financed out of the bank’s receipts from outstanding loans, and second, that Export-Import Bank lending be buttressed by making intensive use of the bank’s previously unexercised authority to sell its paper to private lenders with its guarantee. Such loans would not appear as expenditures. “The Treasury found this idea very attractive, but decided it would be a good idea to obtain an advance guarantee that resale would be a sure thing. It has therefore proposed that the New Zealand loan be made only if the Export-Import Bank can secure advance assurances from private lenders

that they will buy the New Zealand note with the bank’s guarantee. “The Treasury proposal is perhaos the most concrete illustration that has come to hand so far of the extent to which it is prepared to go to squeeze down Government lending activities.”