VERY HEAVY BURDEN

Evening Post, Volume CXVIII, Issue 23, 27 July 1934, Page 10

VERY HEAVY BURDEN

REDUCING LONDON CREDITS

■ . (By Telegraph) . (Special to the "Evening Post.") DUNEDIN, This Day. Inquiries show that the clause in the Finance Bill bearing, on New Zea-1 land local body overseas loans is one of considerable importance to local bodies. It appears that as one of the provisions to ease the burden on local bodies whose loans matured in London, the then existing statutory provision making it compulsory to use any'accumulated sinking funds to repay to that, extent maturing loan was waived, and that, it1 was.enacted so that authority could be given to ■ reraise in London the 'full amount of maturing loan, leaving.the sinking fund held in New Zealand to be s the nucleus of the new loan and to be accumulated towards its redemption. By that means local bodies were relieved of transferring 'to London accumulated sinking funds at tho exchange rate that went up finally to. 25 .per cent. 'The new legislation brings back the statutory provision that prevailed prior to the alteration. - ■ : ■ ■ ■ / ■

' In law it would seem, therefore, that if the Bill before the House finds its way on .to, the Statute Book local bodies with loans maturing in London must for the future transmit to London accumulated: sinking, funds in repayment of that portion of the maturing loan, thereby imposing upon them the necessity of! buying London credits to. that, amount,-arid at the present rate of exchange that would be a_very heavy burden. It'is apparent that the purpose ..of \ the ■■ Government is to reduce London credits which, the Government is under obligation to take oyer.