D.F.C. concessions denied

Press, 18 May 1984, Page 1

D.F.C. concessions denied

By

MICHAEL HANNAH,

in Wellington

The Development Finance Corporation will not receive any concessions from Government pressure to reduce its interest rates, the Acting Prime Minister, Mr McLay, indicated yesterday. The corporation has said it is in a different situation from other lenders, in that much of its money comes from overseas and is affected by currency fluctuations.

However, Mr McLay said

that this excuse would probably not be acceptable if it were "wheeled up” by a private lending institution. The Government recognised, however, that the corporation was in a “different situation” from other finance institutions, he said. Discussions are still being held between the corporation and the Associate Minister of Finance, Mr Falloon, in an effort to have the interest rates reduced. Mr Falloon told “The Press”

yesterday that the discussions did not involve the possible use of Government finance to help the corporation reduce its interest rates. “It is certainly one of the options that could be considered, but it is certainly not being considered at the moment from our point of view or from theirs,” he said. Mr McLay, speaking during the Government caucus’s lunch break yesterday, said that it was the

Government’s wish that a publicly owned and operated body such as the corporation should accord with the . Government’s general approach on interest rates.

The corporation had already reduced its prime lending rate in February, 1983, and again in August, 1983. It had very much lower intermediation rates than private lending institutions, so its lending rate was generally lower than that of finance companies.