Local-body loans ‘a time bomb’
Local Government is sitting on a time bomb of short-term loans that could pose serious repayment problems for a few years, according to the chief executive of the Hamilton City Council, Mr S. A. Lenz. It was time the Counties and Municipal Associations urged the Government to restrict the shortterm investments in localbody stock, he told the council. In 1979-80, 80 per cent of the council’s loan investments had been for six-year terms, with the rest for more than 20 years, compared with 20 per cent over six years in the previous year, he said. Until the early 19705, local bodies had been allowed to borrow only 30 per cent of an issue shortterm but this restriction had disappeared as inter* est rates had climbed to 10 per cent and above. “The emphasis on shortterm borrowing is a time bomb for local government as 20-year sinking fund will repay very little at the end of the six-year terms,” said Mr Lenz.
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Press, 13 August 1980, Page 23
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166Local-body loans ‘a time bomb’ Press, 13 August 1980, Page 23
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