Foreign banks ‘still keen to lend to N.Z.’

Press, 7 May 1983, Page 8

Foreign banks ‘still keen to lend to N.Z.’

NZPA staff correspondent Hong Kong Foreign bankers are as keen as ever to lend to New Zealand and Become involved in the nation’s development projects, according .to the Associate Minister of Finance, Mt Falloon. In ft telephone interview from Manila, *her« he is attending the annual meeting ©f the Aqian Development Bank, he saitf yesterday that sot obb ainong the many bankers he had met this week had suggested any change in the atntsde of the money market towards New Zealand as a result of the downgrading of the country’s eredit rating by New York-based Standard and Poors Corporation. Standard and Poors last week announced the reduction Of New Zealand's AAA rating to AA plus. “If anything, the bankers I have spoken to are fnore interested than ever this year in acting as lead managers (for syndicated loans) Md assisting in our development,” Mr Falloon said.

“These bankers do their homework. Many are people already involved with existing deals and all r have spoken to have been very risitive about New Zealand, have had no adverse comment at all.” Mr Falloon said that there was curiosity in why Standard and Poors had downgraded New Zealand’s credit rating, and he had explained that it was probably influenced by last yea?s high overseas exchange deficit and inflation rate, both of which were falling rapidly. He had also pointed out that there was a degree of common misunderstanding about Government borrowing in New Zealand. A substantial amount of Govern-ment-guaranteed loans were taken up by institutions such as Petrocorp and New Zealand Steel. He said that many bankers had also shown interest in New Zealand’s intention to issue new licences in foreign exchange dealing. A report quoting the Prime Minister, Mr Muldoon, as saying that up to 20 such

licences would be issued had appeared in a Manila newspaper. Mr Falloon addressed the annual meeting yesterday, further advancing Mr Muldoon’s arguments on the need for a solution to world trade and debt problems. He said that developing countries needed help to overcome problems which were not of their own making and warned that continuing protectionist policies could undermine their social and political fabric leading to changes of government and a diminishing of the democratic process. As a first step, the problems needed to be comprehensively examined by a representative group of manageable size. The second step would be a conference of sovereign governments at which a political commitment should be reached. Mr Falloon said that he had also suggested to the meeting that there were lessons to be learnt from factors which had assisted New Zealand in the development of an agriculturally based

economy. Picking up a theme on the need for rural reconstruction in many of the region’s developing countries, he drew attention to the structure of producer control and marketing cooperatives in New Zealand. Among points he made were the benefits in achieving diversification of markets and production, the responsibility of the individual in deciding his or her own future, and the fact that individual property ownership made the rural population less vulnerable when major shocks occurred to commodity prices. His speech had included an expression of concern about some fall-off in lending by the Asian Development Bank to South Pacific island nations, but had also welcomed a new system under which the bank was taking equity investment in some projects where there was a high debt-to-equity ratio. He had noted that while there had been a falloff in lending to the South Pacific, technical assistance had increased.