N.Z. MAY LOSE $3-4m BY MARK REVALUING

Press, Volume CIX, Issue 32114, 9 October 1969, Page 1

N.Z. MAY LOSE $3-4m BY MARK REVALUING

New Zealand stands to lose $3 million or $4 million by a revaluation of the German mark, as well as paying an extra $242,000 to $322,000 a year interest for the next eight years.

The possible loss comes about through Deutschmark loans raised in 1967, 1968 and 1969. Details of these loans were given in Parliament on July 16 this year by the Minister of Finance (Mr Muldoon) in reply to a question by the Leader of the Opposition (Mr Kirk).

The amounts of these loans —which include sterling/ Deutschmark loans—at March 31 this year were as follows. ?“z°m nt £sB - - 12.84 17 78 ... • • 1 7 - 84 14 3 82 . •• 17.88 12 84 ::: Total w 70 - 88 The total interest bill on these loans, according to the Public Accounts for the year ended March 31, is $4.94 million, which averages 7.6 per cent. The Deutschmark has risen 61 per cent or 7 per cent since September 30, when the official exchange rate—DMl to 25cUS—was suspended and the exchange rate was allowed to “float.” , Germany’s partners in the European Economic Community have urged Germany to return to a fixed exchange rate but this may not be possible in the interregnum between the old coalition dominated by the Christian Democrats and the new coalition dominated by the Social Democrats. When the new Government formally takes office on October 21 it Is expected to fix a new official rate. The president of the Ger-1

man central bank has urged a revaluation of about 6) per cent; spokesmen in other E.E.C. countries have called for a revaluation of “6 to 8 per cent.” A 6 per cent revaluation would increase New Zealand’s German debt from $7l million to $75 million; an 8 per cent revaluation, to s76f million. At March 31 this year New Zealand held nearly $23 million worth of Deutschmarks on deposit in Germany. This is shown, among the Treasury’s investments abroad, in the annual return of securl-

ties held by Government departments. A 6 per cent revaluation of the mark would increase the value of these deposits to $24.3 million; an 8 per cent revaluation to $24.8 million. At the old exchange rate. New Zealand's “net indebtedness” to Germany was $4B million —the difference between loans and outstanding deposits held in Germany at March 31. A 6 per cent revaluation would raise net indebtedness to $5l million; an 8 per cent revaluation would raise it to $52 million.