NATIONAL DEBT

New Zealand Herald, Volume LXXIV, Issue 22846, 29 September 1937, Page 15

NATIONAL DEBT

L t I INCREASE OF £5,109,102 REDUCTIONS OVERSEAS CONVERSION OPERATIONS SAVINGS IN INTEREST [nY TELEGRAPH —SPECIAL REPORTER] WELLINGTON, Tuesday A net increase of £5,109,102 in the Dominion's public debt resulted from last year's operations, bringing the total at March 31, 1937, to £287,670,200, according to the statement made by the Minister of Finance, the Hon. W. Nash, in his Budget speech to-night. The Minister said that fresli borrowing amounted to £8,502,420, but against this gross increase in debt must be offset redemptions totalling £3,393,318, leaving the net increase at £5,109,102. lAinds for debt redemption were obtained from the following sources:— Public Debt Repayment Account £1,691,188 Reparations and war credits .. 43,700 Sinkinpr funds .. .. .. 13/189 Repayment of capital by other accounts .. . . . . 1,044,935 £3,393,318 'Purchases by State In terms of the Southland ElectricPower Supply Act; 1936, tho Government assumed liability for the loans raised by that board and exercised the board's option to repay in London in September, 1936, the sum of £1,500,000 sterling, said tho Minister. Funds for this purpose, plus exchange costs, were obtained to the extent of £407,000 from sinking fields, and the balance was borrowed in New Zealand. The balance of the board's indebtedness (£133,000) was domiciled in New Zealand, and this portion of the debt was converted to a 4 per cent rate involving a premium issue of £3678. The net effect of these operations was to increase the public debt by £1,670,569. The elimination of private shareholders in the Reserve Bank and the State Advances Corporation in terms of legislation passed last year involved tho issue of public securities to the extent of the nominal capital of the institutions, £1,500,000, plus £155,728 allowed to private shareholders as premiums. Operations in London Detailed particulars of the conversion operations in connection with the 6 per' cent 1936-51 loan which was dealt with in London on August 1, 1936, were included in the Budget of last year, while the incidental expenses appear in this year's accounts, Mr. Nash continued. The conversion issue was made at a discount of 1} per cent, and a total of £4,000,000 was converted in London. Of the balance, £1,690,688 was repaid from the resources of the Public Debt Repayment Account and £179,300 from the proceeds of issues in New Zealand. Charges and expenses of these operations, including exchange on remittances to London, involved further borrowing in New Zealand to the extent of £628,147. Conversion in Dominion In addition- to the London conversion operations, opportunity was taken to exercise the right to repay £12,426,875 4 per cent 1937-40 stock and debentures domiciled in New Zealand. Cash and conversion applications totalled £11,440,249, and the balance required for redemptions was found by the issue of Treasury bills for £925,000, and £61,626 from debt repayment resources. The two conversion schemes to which reference had already been made had resulted in substantial savings in interest, tho Minister said. The London conversion loan was responsible for an annual saving in interest of approximately £205,000, with a corresponding saving in exchange charges, while the New Zealand conversion operations had effected a reduction in interest charges to the extent of £105,000 per annum. In both cases the greater portion of ihe savings was due to a reduction in interest rates, the balance being accounted for by reductions in the amount of the debt. Domicile of the Debt Other maturing loans of £706,280 and £2500 were also\ dealt with in February, 1937, and March, 1937, re-, spectively, £424,800 being repaid and £283,980 being renewed, Mr. Nash explained. Purchases of securities in Australia at prices above par resulted in conversions involving premiums totalling £5562. No increase in debt charges was involved. The Minister said the total public debt as at March 31, 1937, amounting to £287,670,200, was domiciled as follows: London .. ..£150,737,017 Australia .. .. 891,900 New Zealand .. 130.011.253 Total .. .. £287,070,200 As a result of the year's operations tho London debt decreased by £1,974,913, Australian debt by £700,750, while the debt domiciled in New .Zealand increased by £7,784,765, the Minister continued. Of the latter amount, £5,613,979 represented departmental investments and the balance issues to the public in connection with the purchase of the Southland power undertaking and cancellation of shares in the Reserve Bank and State Advances Corporation. No public issue was made to meet public works expenditure, which was financed from internal resources.