Failed In Bid To Ease Loan Rate

Press, Volume CIV, Issue 30884, 18 October 1965, Page 1

Failed In Bid To Ease Loan Rate

The Minister of Finance (Mr Lake) said in Christchurch yesterday he had failed in an attempt to have New Zealand exempted from the United States interest equation tax, which had the effect of making money borrowed in New York 1 per cent dearer than the current rate.

“I spoke to the assistant secretary of the United States Treasury,” said Mr Lake, “to see if New Zealand could be exempted from the tax, like Japan and Canada. The tax has been extended for a further two years. I was told that exemption was not possible. This makes our borrowing there much more expensive.” At the World Bank meetings in Washington, Mr Lake had discussions with the president of the bank (Mr G. D. Woods) on the terms of loans now under negotiation—one for re-equipping the railways, and one for hydro-electric development in connexion with Marsden Point. He said he formed the impression that there were many other countries which, like New Zealand, had balance of payments problems. There was no doubt that the sources of finance available to the developing countries were becoming fewer. “This is a matter of concern to the developing countries,” said Mr Lake. “The situation of countries like New

Zealand have been made clear to the financial authorities, such as the World Bank and the International Monetary Fund, and a good deal of work is being undertaken by these organisations to devise means of assisting member; countries which find themselves adversely affected.” Mr Lake said the result New Zealand sought was more overseas currency at a lower interest rate. “We have been developing at a very rapid rate in New Zealand,” he said, “and the Government is anxious to maintain the rate of development. “The re-equipping of the railways would be a very good thing for New Zealand, but it might cost about £2O million. If we can't get the money we may have to postpone it. We want to press on with hydro-electric work too.” Mr Lake said New Zealand was very concerned that the countries with which she dealt should be having balance of payments difficulties and was very interested in the corrective steps taken.