EXCHANGE INDEMNITY

New Zealand Herald, Volume LXX, Issue 21462, 8 April 1933, Page 12

EXCHANGE INDEMNITY

AMOUNT DUE TO BANKS "GOVERNMENT NOT WORRIED" ASSURANCE BY MINISTERS [by telegraph—-own correspondent] WELLINGTON, Fviflay Denials of statements that the Government. after receiving tlio iir.st quarter's returns from the banks, is concerned over tho amount which will have to be found for the exchange in-, demnity by the end of the year, were made by both tho Prime Minister, lit. Hon. G. W. Forbes, and the Minister of Finance, lit. Hon. J. G. Coates, when questioned on the point. "It can bo stated quite definitely that neither I nor the Government is concerned in tho slightest," said Mr. Coates. "There is no truth whatever in the statement that tho indications already are that the Government will be embarrassed in finding sufficient to indemnify the banks, on account of exehango surpluses at the end of the year." In any event, Mr. Coates added, it was impossible to predict with any accuracy the outcome of the year's exchange operations, and it would be entirely misleading to accept tho first quarter's figures as a true indication of tho year's working. This was tho height of the export season, and it was to be expected that surpluses would'accumulate in London temporarily. Any suggestion that the Government was worried over the position was entirely erroneous. There was no change in tho position as it was estimated during tho last session of Parliament, and tho Government did not anticipate having to find more on account of indemnity that was at first thought. j _ "We will see it through quite all right," remarked the Prime Minister when interviewed. "Does the Government look as though it was worried?" ho asked, with a broad smile. "There is nothing abnormal in the figures to date. Mr. Coates is in close touch with the position. It is, of course, impossible to predict the result of the year's operations with any minute degree of accuracy, for tho lower prices for butter exports and tho shrinkage of imports must have a bearing on the position. However, there is nothing whatever to indicate that -4ho position at the end of the year will be otherwise than predicted." In a statement made in the House of Representatives on January 27, Mr. Coates estimated the Government's expenditure for 1933-34 would be increased by a total of £2,400,000 on account of exchange costs. The extra cost in respect of external debt services with exchange at 10 per cent for tho full year was set down at £350,000. The estimated extra cost of external debt by reason of the increase of the exchange rate to 25 per cent was stated at £1,050,000, and tho cost for exchange for surplus- bank funds in London at £1,000,000. Mr. Coates then said that certain authorities considered that the accumulation of London funds would fall <iort of the estimate, and that £1,000,000 could be taken only as a working figure. Later in the session Mr. Coates said that according to advice from the Government's London agents, there was reason to believe the Government might not have to find even for the full year. m