Farmers urged to use debt scheme

Press, 28 July 1986, Page 4

Farmers urged to use debt scheme

PA Wellington At least $1.2 billion of the Rural Bank’s lending to farmers would quality for the debt-discounting scheme announced on July 2 as part of the Government’s farm package, said the bank’s general manager, Mr Ray Chappell. If these loans were discounted 40 per cent on average, the bank would be writing off $4BO million, Mr Chappell said. “The farmers are only at the tip of their Understanding of this and the

potential is very, very great to do something out there. "There is no question about it — It is a good scheme.” It involves the bank’s reducing farmers’ debts, increasing their interest rates and restructuring the remaining mortgages. “We have over $2.2 billion of concessional loans invested direct to farmers,” Mr Chappell said. “I certainly expect that at least $1.2 billion would qualify for a discount.

“If the average discount was only 20 per cent on $1.2 billion this is a writeoff of $240 million. However, if it were, say, 40 per cent, this is a writeoff of $4BO million.”

Mr Chappell it was too early to tell how much money the bank would in fact be asked to write off. Bank officers had only just received final papers on the scheme this week.

The discounting scheme was only one form of debt restructuring proposed by the bank. Other possibilities included interest holidays, indexed mortgages, conversion of debt to equity, and the purchase and leaseback of assets, he said.