THE PUBLIC DEBT.

Otago Witness, Issue 3774, 13 July 1926, Page 15

THE PUBLIC DEBT.

' H VtHE YEAR’S INCREASE. CHIEFLY ABBORBEO BY BTATE ADVANCEB. Tn the course of the Budget, the Minis* ser of Finance made the following statement in regard to the public debt on March 31 last:— The gross public debt at March 31, 1926, was £238,855,478, as compared with £227,814,047, 12 months previously. The debt is allocated as follows: £ Ordinary 125,992,741 War 75,333,648 State advances 27,771,153 Discharged soldiers’ settlement .. „ 9,757,936 £238,855,478 The increases are—- £ Ordinary debt 6,055,882 State advances 6,334,973 £12,390,855 Decreases— Discharged soldiers .. .. .. 51,950 .War debt 1,298,074 £1,350,024 Leaving the net increase in the gross debt at f 11,040,831. Of the increased debt of £11,040,831, State advances (settlers, workers, and local authorities') absorbed £6,334,973, or 57 per cent. The total borrowed for ordinary debt purposes was £6,859,566, but by the redemptions out of Ordinary Revenue Account (£445,513), from other accounts (£356,071), and by the removal from the debt of debentures totalling £2IOO, the increase in ordinary debt for the year was reduced to £6,055,882. The gross debt at March 31, 1926, was held as under Amount. £ New Zealand 107,164,718 Australia 3,645,100 London. 128,047,660 238,047,478 Gross annual charge. £ Interest ... 10,670,170 Annual sinking funds 7,000 Repayment of funded debts.... . 350.074 Public Debt Repayment Account 928,492 Total gross charge 11,955,726 (Estimated recoveries from trading and other accounts 2,500,849 Net annual charge at March 31, 1926 9,454,887 As the result of research into the history of the debt and the .allocation of miscellaneous items in the consolidated stock to the respective accounts it is now possible for the first time for the assets held by the State which may be set off against the debt. This enables a true apportionment of the public debt to be made, and ensures a> more accurate capitalisation of the various Government undertakings, an important consideration in view of the balance sheet system now in operation. SINKING FUNDS AND DEBT REPAYMENT. Sinking funds as follows exist for the extinction of that portion of the debt to the following appropriate accounts: £ State coal mines 48,199 Nauru and Ocean Islands ... 19 Samoan loan 4,747 Westport Harbour loans 186.588 Electric supply 17.391 State advances ... 2.017,348 £.274.262 By the repayment of the Public Debt Act. 1925. means are provided whereby the whole of the public debt, other than those portions for which separate sinking funds exist, will be extinguished in approximately 60 years from the time of coming under the provisions of the Act. The Redemption Fund Capital Account, ’ Established by section 8 of the Act, is as under £ Moneys held by the Superintendent. State Advances Office ... 3,258.956 Moneys held by the Public Trustee 7,966,689 Moneys transferred by wav of loan from the Consolidated Fund to the Discharged Soldiers Account 13,500,000 £24.725.645 Interest earned by this amount is credited to the Consolidated Fund as a set-off to the amount paid into the Debt Repayment Account under the nrovisions of the Act—viz., £ per cent, of the public debt outstanding which comes under the Act. and 4 per cent, of the debt redeemed in accordance with the Act. STATE ADVANCES AND OTHER LOANS. 'As «hown above, the artiount ol '£6,346,955 was borrowed last year foi State advances purposes. £2.000,000 of this was included in the London loon of 1925. Apart from other small loans the Government, in order to provide funds to meet iirears of application for State advances. placed a ,54 per cent, issue on the market. Up to March 31, £4,233,705 had been received for State advances, of which about one-half came from overseas investors. as below Now Zealand ... £2.086,205 Overseas ... ..i 2.147,500 In addition to the above, £650,000 was 'raised under this issue for public works and hydro-electric purposes. The issue is atill open to the public. After allowing for expenses, the money is expected to cost about £5 10s 8d per cent, per annum. 1926 PUBLIC WORKS LOAN. Aft the end of May, London advised that, the general strike having been called off. a resumption of the lending market was aft hand, though the position was, in yiew of the continuance of the coal strike •till reported to be somewhat uncertain at t» terms obtainable. It was, however,

decided to proceed, and a loan of £6,000,000 under the following authorities was underwritten: Finance Act, 1925 (public works) £4,000,000 Electric-power Works Loan Act, 1919 (electric supply) ... ... 1,100,000 Railways Improvement Authorisation Act, 1914 (railways improvement) 900,000 £6,000,000 It was issued to the public on May 31 at £9B 10s; interest 5 per cent., maturing on January 1, 1946; the yield to investors being £5 2s 6d. The result was in all the circumstances somewhat surprising as the application list was closed in two hours, the sum of £119,600,000 from 24,059 applicants having been offered, while the loan subsequently went to a premium FUNDED DEBT. Payments amounting to £1,651,930 were made in 1925-26 in respect of £27,532,164, loans advinced by the Imperial Government, and funded in terms of the agree ment dated September 6, 1922. The half-yearly payments represent both principal and interest, and the following table shows how this debt has been reduced to £26,257,022: Balance of Debt. Instalment pil. Interest. Principal, outstanding. December 1, 1922 . . .. £684,794 £141,171 £27.390,993 June 1, 1523 681,282 144,683 27.246.3i0 December 1, 1923 677,634 148,281 27.098,029 June 1, iS24 673.936 151,969 26,946,060. December 1, 1924 679,216 355,749 26,590,311 June 1, 1225 . 651,367 164,598 26.425.713 December 1, 1925 657,274 168,691 26,257.022 New Zeiland has the right, on giving three months’ notice, to repay at par any part of the principal. PUBLIC DEBT COMMISSION. The Public Debt Commission, constituted under the Repayment of the Public Debt Act, passed last session, held its first meeting early in March of this year for the purpose of formulating the policy to he adopted in the matter of debt-repayment and to set in motion the machinery provided under the Statute. The amount available for debt-repayment for the financial year ended March 31 last was £*72,734, and the commission applied this in discharging from the debt secun ties purchased from time to time at a discount, together with further suitable securities held bv Treasury Investment Accounts. Securities of a total nominal value of £839,733 were accordingly cancelled and redeemed. As opportunity offers for purchase of securities on favourable terms, »t is the intention of the commission to apnlv its resources to the reduction of deadweight and overseas debt.