“Happy Mean” In Loan Timing

Press, Volume C, Issue 29516, 18 May 1961, Page 16

“Happy Mean” In Loan Timing

(New Zealand Press Association)

WELLINGTON, May 17.

"Mr Walsh has criticised the early start on overseas borrowing, and Mr Nash suggests we have left it too late, so it seems we have hit on the happy mean in the timing of the present £2O million London loan,” the Minister of Finance (Mr Lake) said today replying to comments by Mr Walsh and Mr Nash.

Mr Lake said the facts did not support Mr Nash’s suggestion that the loan could have been floated earlier at lower cost. New Zealand’s existing 5 per cent, loan on the London market was selling at a price to yield £6 3s 6d per cent, in February and now it was yielding £6 2s 7d per cent.

This loan had up to 10 years to run and was therefore comparable in length of time with the present £2O million loan which was for a term of 11) years. Yields in London on New Zealand's 6 per cent, issue maturing in 1976-80 had dropped from £6 2s 9d per cent, in February to £6 2s 6d per cent, in May. It was clear that New Zealand had lost nothing by holding off its approach for a new loan until the present. Mr Lake said. “I agree with Mr Walsh that the cost is relatively high. It is worth while noting, however, that loans from the Internationa! Monetary Fund and World Bank would cost less.’’ the Minister said. ‘‘lf New Zealand can negotiate satisfactory conditions of entry, I trust Mr Walsh will extend the same support for joining the IM F. that he has expressed in other years.” "Hardly Realistic” Mr Walsh’s claim that imports should have been reduced earlier this year was hardly realistic, Mr Lake said. Imports contained a very high proportion of producers’ materials and equipment and goods not made in New Zealand, and it was most important that the economy be given time to readjust to lower levels and changed patterns of importing In 1958 when the Labour Government was faced with a similar situation it took six months after the introduction

of import licensing in January before imports were brought down to a lower level than th* previous year.

The National Government had adopted a considered course of action which would reduce the flow of imports without disrupting normal economic activity, Mr Lake said.