A CONTRACTUAL OBLIGATION

Evening Star, Issue 21218, 27 September 1932, Page 3

A CONTRACTUAL OBLIGATION

SINKING FUNDS PART OF SECURITY [Pbr United Pi:ess Association.] WELLINGTON,. September 20. “ Tliero fun bo no doubt that, having regard to the purposes for which sinking funds may lega II y ho used, lenders are entitled to regard such funds as part of their security, and a postponement of the annual contributions could reasonably be considered a breach of faith with the lenders unless their concurrence was obtained.' 1 said the Prime Minister (the lit. Hon. G. W. Forbes), replying to a resolution passed by the Executive of the New Zealand Counties Association asking for a postponement of the repayment of the county council sinking funds for two years owing to the financial stringency among the counties duo to the non-payment of rates. The Minister said it was usual in the case of local body loans to include in the loan proposal voting papers the amount of the sinking fund to be set aside for the repayment of the loan. Lenders taking up local body securities would to some extent be influenced by (he provision made. The Minister added that lie had ) knowledge of any scheme for the postponement of sinking fund payments stated to have been recently carried out in England in respect to local loans, and he asked for further informa (ion on the point. So far as ho was an are the Imperial Government was not suspending any contractual sinking fund or other contractual obligations for repayment. The only arrangements he knew of regarding suspensions, said the Minister, referred to voluntary appropriations of revenue and surpluses for reduction of debt.