DOMINION’S LOAN REPAYMENT

Timaru Herald, Volume CLVIII, Issue 23347, 2 November 1945, Page 5

DOMINION’S LOAN REPAYMENT

Surprise For British Market Conversion Expected By Telegraph—N.Z Press Assn.—Copyright (12.35 a.m.) LONDON, Nov. 1. Market reactions made it clear that, in deciding to eliminate the only two loans with which it could deal, the New Zealand Government had sprung a surprise, says the “Financial Times.” “It had been expected that a conversion offer would be made in respect of the 5 per cent loan maturing on January 1 next. Actually New Zealand will now repay rather more than 20 per cent of her outstanding loan indebtedness in one stroke and will increase her total wartime repayments to some £35,000,000.

"Possibly the agreement made between ourselves and New Zealand some months ago—providing for payments by the United Kingdom of £28.000,000 as well as for increases in prices for produce to compensate for the disparity in import and export prices—may have been a contributory factor. At the same time the level of New Zealand sterling balances is due to abnormal circumstances and her being unable to obtain our goods in return.

“In future, the Dominion may require money for restocking purposes, while she still owes substantial amounts to the British Government on account of war advances. Presumably, the Finance Minister is not only satisfied with the position, but is certain that his sterling balances are adequate to meet future commitments.

“The total saving in interest effective by this repayment is not unsubstantial for New Zealand and, coupled with the fall in the value of the pound, it will lighten the real burden of her debt service to this country. From our own standpoint the repayment involves a further reduction in income from our depleted stock of overseas investments But, unhappily, this process seems unlikely tp'Continue.”