NEW ZEALAND WAR DEBT

New Zealand Herald, Volume LXIX, Issue 21247, 29 July 1932, Page 9

NEW ZEALAND WAR DEBT

CONVERSION PROPOSAL MR. COATES RAISES POINT DISCUSSION WITH BRITAIN ' 3$ PER CENT BASIS HINTED By Telegraph—Press Association—Copyright OTTAWA, July 27 The leader of the New Zealand delegation to the Empire Conference, Mr. J. G. Coates, suggests that Britain's successful £2,000,000,000 war loan conversion scheme may have an important bearing on New Zealand's external interest charges. Mr. Cpates says New Zealand owes Britain representing her 5 per cent funded war debt. He considers that there is a prospect of reducing this to 3£ per cent—the same rate as the British conversion loan. Tho presence of tho British Chancellor of the Exchequer, Mr. Neville Chamberlain, at Ottawa happily provides a favourable opportunity for discussing tho matter. New Zealand's funded' debt, which amounted to £27,532,164 in 1922, when tho agreement was made, is repayable on a 6 per cent annuity basis, requiring 36 equal annual instalments of £1,651,930. Payments are duo half-yearly on December 1 and June 1. Interest is at the rate of £4 19s 5.88 c! per cent, the balance of the 6 per cent going to the reduction of tho debt. The principal outstanding on March 31, 1931, amounted to £24,321.234. Of tho payments made in 1930-31 £1,225.822 represented interest and £426,108 repayment of tho principal sum. By the extension of the Hoover moratorium to this debt, owed by New Zealand to the British Government, the payment of tho annuities is at present suspended. It was announced in last year's Budget that tho first instalment for 1931-32, that due on Juno 1, 1931, had been paid. Since then tho postponement has operated. All Budget estimates for tho current year have been based on the assumption that the moratorium will continue. Therefore, a reduction in tho rate of interest would bring no saving this year. Resumption of payments, which would mean that an instalment would have to be found for December 1, would place on the Budget a fresh burden for which no provision has been made; a lower rate of interest would simply mean that the burden would be smaller than if the annuities were to continue at the level paid heretofore. In addition, from the proceedings at the Lausanne Conference, there is no prospect of any reparation moneys being received as a set-off to the obligations under the debt-funding agreement. COMPOSITION OF I)EBT SECURITIES AND INTEREST PART COVERED BY CONVERSION [by telegraph—own con respondent] WELLINGTON, Thursday Following is a list of the individual loans included in the debt funding agreement drawn np lin 1922 by Sir Otto (then Mr.) Niemeyer, representing the British Government, and Sir James Allen, then High Commissioner for New Zealand. The 1929-47 5 per cent issue of £11,100,000 represents an amount included in the present British conversion scheme: — 4£ per cent debentures, 1925-45, £5,323,232 ; 5 per cent debentures, 1929-47, £11,100,000; 3£ per cent debentures, 1925-28, £1,000,000 ; 5 3-8 per cent debentures, £9,900,000 ; 3£ per cent book debt, £168,421; 5 per cent book debt, £40,510; total, £27,532,163. On the basis set out in the agreement of September 6, 1922, the total funded debt would be repaid in a little under 36 years, counting from Juno 1, 1922. This means that tho 72nd instalment payable at the end of 36 years would be slightly less in amouht than the preceding instalments.