SINKING FUNDS

Manawatu Standard, Volume LII, Issue 255, 27 September 1932, Page 5

SINKING FUNDS

REPAYMENTS BY COUNTIES. PREMIER REFERS TO POSTPONEMENT. WELLINGTON, Sept, 27. “There can be no doubt that, having regard to the purposes for which sinking funds may legally be used, the lenders are entitled to regard such funds as part of their security, and postponement of annual contributions could reasonably be considered a breach of faith with lenders unless their concurrence was obtained.” These remarks were contained in the reply of the Prime Minister, Rt. Hon. G. W. Forbes, as Acting-Minister of Finance, to the resolution passed by the executive of the New Zealand Counties Association, asking for the postponement of the repayment of county oouncil sinking funds for two years owing to the financial stringency among county councils due to the nonpaymet of rates. _ The Minister said it was usual in the case of local body loans to include in the loan proposal and the voting paper the amount of the sinking fund to bo set aside for repayment of the loan. Reference to the sinking fund provisions would probably be made in any prospectus issued, and lenders taking up local body securities would to some extent be influenced by the provision made. The Prime Minister addod that he had no 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 information on the point. So far as he was aware, the Imperial Government was not suspending any of its contractual sinking funds or other contractual obligations for repayment that were entered into in respect of certain particular loans when they were raised. The only arrangements he knew of regarding suspensions, said the- Prime Minister, referred to voluntary appropriations of revenue and surpluses for reduction of debt.