Over £100,000,000

Sun (Auckland), Volume II, Issue 562, 15 January 1929, Page 8

Over £100,000,000

N.Z.’S LOAN REQUIREMENTS Programme for Three Years LAST week the New Zealand Government successfully went on the London market for a loan of £ 7.000,000 and made arrangements for the conversion of £12.000.000 of • maturing loans. This is only the start of what promises to he a period of big figures in New Zealand Government finance.

Within the next three years New Zealand Government loans amounting to £78,922,808 arrive at maturity date. This, with the loans promised to carry out the ordinary programme of the Government, will see the Dominion looking to the market for well over £100,000,000, an amount considerably in excess of the total indebtedness of the country prior to the days of big borrowing from 1915 onward. The maturing loans will be met by conversion, but, even so, it is certain that the new issues will be written up at considerably greater cost to the

country. This was instanced in the conversion proposals last week, holders being invited to convert £IOO stock into £lO4 5s of per cents. This, in itself, increases the public debt by over £500,000, apart from the additional interest charges. Figures taken from the New Zealand Year Book for 1929 show Government loans amounting to £16,223,945 falling due this year, £41,949,357 during 1930, and £20,449,506 in 1931. ONLY A START When it is considered that the Government is pledged to carry out an extensive programme, it can be seen that the borrowing and conversion operations of the Dominion within the

next three years will result in considerable accretions to the annual interest charges on the country. It must not be forgotten that the new £7,000,000 raised last week will be required, according to the prospectus, largely for railway development works. If the promised State Advances programme is launched, annual loans of much greater magnitude than last week’s will be called for. At March 31, IS9I, the total public indebtedness of the New Zealand Government stood at £38,830,350: by March of 1914 it had increased by £55,923,447. The six-year period up to March 1920 saw another £106,416,92S added to the liabilities of the Dominion, £71,970,636 being a direct loss as a result of wartime expenditure. The extensive programme of public works development launched by the Massey administration saw further loans to the exetent of £50,225,497 bring the gross total to £251,396,252 by March of last year. These figures have since been swelled by a further £12,000,000. Indications are that even bigger figures can be expected in the near future. DOMICILE OF OUR DEBT Regarding the domicile of New Zealand’s debt it is interesting to note that at March of last year it was estimated that 42.75 was held in New Zealand with 55.95 in England. The percentage held in other countries was negligible. Much talk has been heard regarding the possibility of raising large sums internally. There is no doubt that this could be done, but, certainly, not at a rate which would compare with the price of money raised in London even when underwriting, discount and exchange charges, etc., are added to the latter. At the moment the New Zealand Treasury Office is offering 5i per cent, short-dated bonds over the counter with no sign of the issue closing as a result of over-sub-scription. In addition. Rural Advances Bonds at 5 per cent, are on offer at £94 10s. These also, while reported to be going out steadily, are not showing any sign of being oversubscribed. Last week showed that there was little chance meantime of raising money on the London market which could be profitably released to settlers in this country at 41 per cefit, or even 5 per cent. The experience of the Treasury Department shows that there is even less hope of raising it in this country. Borrowing operations over the next three years are certainly going to be interesting. “NOON CALL.”