£10 Million Credit For N.Z. In Britain?

Press, Volume XCVII, Issue 28679, 1 September 1958, Page 12

£10 Million Credit For N.Z. In Britain?

(Special Correspondent N.Z.P.A.)

LONDON, August 29. According to a statement by the financial editor of the “News Chronicle” the Midland Bank has granted £l,O million unsecured credit to the New Zealand Government, which will be aMe to draw on it to meet payments overseas. No confirmation of the loan is available in London, either from the Midland Bank or New Zealand House, and spokesmen at both places refused any comment. > The financial editor adds that New Zealand’s finances are in “a pretty poor way, partly as a result of a substantial fall in the prices for her exports. “Apart from the £2O million long-term loan issued in London earlier this year there has also feeen some borrowing in Australia, and negotiations have begun to raise credits in New York against the security of New Zealand gold. “A characteristic and significant difference between the New York and Lohdon markets is that United States banks want gold security, while we trust the customer.”

The “Economist,” referring to New Zealand as “the outsider” as far as membership of the International Monetary Fund and the World Bank is concerned, says: “New Zealand is still struggling to raise external finance to cover a balance of payments deficit in 1958 estimated at between £55 million and £75 million.

“The Dominion’s sterling balances, which amounted to £95 million a year ago, are now down to £45 million, which is near to an irreducible minimum. “The gap is being covered partly by the £2O million raised in London in April and in addition New Zealand has borrowed the equivalent of £8 million sterling .from Australia.

“Plans are now afoot for raising more ceredits in London and New York markets.

“The Minister of Finance (Mr Nordmeyer) announced in Wellington that legislation will be introduced empowering the Reserve Bank to pledge its assets, including gold reserves. “In anticipation of this legislation negotiations have already taken place in New York, with a view to raising the equivalent of about £lO million in that market. ' . “The straits into which New Zealand’s external finances are being driven has reawakened interest in the possibility of that country at last becoming a member of the International Monetary

Fund and of the World Bank. “Both the Prime Minister (Mr Nash) and the Minister of Finance would favour an application for' membership, but among the Government and Opposition back bencherg there are still enough backwoodsmen who think that international financial institutions are schemers against New Zealand’s sovereignty, to ,bar this way out of its external payments crisis,” states the “Economist.” WELLINGTON, August 31. The Minister of Finance (Mr Nordmeyer) said: “Negotiations are still in progress and I have no comment to make.”