NEW ZEALAND LOANS

Otago Daily Times, Issue 22067, 25 September 1933, Page 8

NEW ZEALAND LOANS

It is likely enough, as is suggested in a message which we publish this morning, that there are a good many people who think that the Government of the Dominion should be able to do what Australian Governments have lately been doing on a large scale in the conversion of their loans. As has been explained, however, by the Prime Minister, the Dominion possesses no option of conversion at the present time, except in the case of one shortdated loan of £5,000,000. This is a loan which was raised on unfavourable terms, and the Government has already arranged, we are told, to undertake the conversion of it as soon as the conversion operations of the Australian Governments have been completed. The statement that arrangements have been made for the conversion of this loan implies that the British Treasury will facilitate the transaction. As a matter of fact, the overseas loans that will admit of conversion during the ensuing few years do not aggregate six millions. Another respect in which the conditions affecting the' indebtedness of New Zealand in London are different from those of the Australian debt is that the Government of the Dominion was fortunate in the past in borrowing at lower rates of interest than were procurable by most of the Australian States. The Commonwealth and State Government loans that have recently been converted, or are at present in process of conversion, were raised at rates ranging from 51 per cent, to 6i per cent. More, than one-half of the total public debt of the Dominion carries interest at the rate of 4J or 5 per cent., and a large proportion of it was raised at 4 per cent. The amount of indebtedness on which the rate of interest exceeds 5J per cent, is only £5,899,000 at 6 per cent. Consequently the benefit that will be derivable from a conversion scheme will be much smaller than that which will accrue to the Commonwealth. The terms on which the New Zealand Government has been able to borrow over-

seas in the past are indicative of the credit that has been enjoyed by the country. The importance of maintaining this credit at the present time is, it is to be feared, not sufficiently recognised in some quarters.