INCREASE IN THE PUBLIC DEBT

Hawke's Bay Herald-Tribune, Volume 81, Issue 5, 29 September 1937, Page 7

INCREASE IN THE PUBLIC DEBT

Onr Own Correspondent.)

Fresh Borrowing During Past Year MINISTER EXPLAINS

(From

WELLINGTON, Last Night, A net increase in the Public Debt of £5,109,102 was incurre'd during the year ended on MaTch 31 last for the provision of funds to meet expenditure for various capital purposes, less repayment of debt effected. The Public Debt now totals £287,670,200. In the course of his Budget speech to the House of Representatives tonight, the Minister of Finance, the Hon. Walter Nash, explatoed that the fresh borrowing was tocurred for the following purposes ; — _ n*-' m SPublic wprks «« .v r..: 4,440,053 Parchase of Southland Electric 1 Power Board undertaking 1,670,569 iA.cquisition of' shareholders' • toterests to Reserve Bank and Mortgage Corporation 1,655,728 Gosts, charges, and expenses arising to cpnnection with the conversion of 6 p.c. £5,869,988 1931-51 London loan (incl. exchange on remittances from N.Z.) . 628,147 Piremiums on conversions in New Zealand ,. .. 5,862 Housing o. .. .. .. .. 100,000 Eaised for redemptions but not used ^ . 2,061 ^ £8,502,420 f „ Redemptions, Againgt this gross increase in. debt must be offset redemptions totalltog £3,393,318, leaving the nett 'increase. at £5,109,102. g DoijScile of Debt, The nett increase of £5,109,102 raisedi the debt as at Mareh 31, 1937, toj £287,670,200, .domicilqd as follows:-— £ (London «ej .. .. . .. «.i 156,737,017 Australia .. ... ... :. 8.91,900 pew Zealand L. .1 .._.j ,.. 130,041,283 - Total ..., .^j ^ ;.. £287,670,200 'As a result of the 'year*? operations ithe London debt ' decreased by 1 £1,974,913, Australian debt by £700,750, while the debt domiciled to New Zealand increased by £7,784,765. Of the Jatter amount, £5,613,979 represented departmental inveStments and the balance issues to the public to eonnection With the purchase of the Southland1 power undertaking and ^ancellation of shares to the Reserve Bank and State Advance? Corporation. No public issue wa? made to meet public works expenditure, which was financed from internal resourceSs > Southland Power Purchase. "In terms of the Southland Electricpower Supply Act, 1936," the Minister continued, "the Government assumed Hability for the loans xaised by that board and exercised the board's option pt repay jn London on September 15, 1936, .the sum of £1,500,000, sterling.

Fund? for this purpose, plus exchange costs,, were obtained to the extent of £400,000 from sinking funds, and the balance wa? borrowed to New Zealand. The balance of the board's indebtedne?s (£133,000) wa? domiciled to New Zealand, ahd tfii? portion of .the debt was cpnverted tq a 4-per cent. rata, in. volving a premtom issue of £3678. Tho net effect of these operations wa? to ixicrease the Public Debt by £1,670,569. "The elimination of priviate shareholders to the Reserve Bank and the State Advanees Corporation to terms pf legislation passed last year involy ed the issue of public securitie? to the extent of the nominal capital of the institution, £1,500.000, plus £155,728 allowed to privfate shareholdera as premiums." Detailed particulars of the conversion operhtions to eonnection with the 6-per cent. 1936-51 loan which was dealt with to London on August 1, 1036, were included to the. Budget of last year, while the tocidental ex« penges appeaved in this year'? accounts, Mr Nash aijded. The conversion issue wa? 'made at a discount of lj pqr cent., and a total of £4,000,000 was CQnyerted to London, Of the balance £1,60O,6§8 was repaid from the resources of the Public Debt Eepayment Aqcpunt and £179,300 from the proceeds of issues to New Zealand. Charges and expenses of these operations, including exchange on remit* tances to London, tovolved further borrowing to New Zealand to the extent Of £628,147. In addition to the London conversion operations, opportunity was taken to exercise the right to repay £12,426,875 4-per cent. 1937-40 stock and debentures domiciled to New Zealand. Cash and conversion applicatiops totailed £13,440,249, and the balance required for redemptions was found by the issue of Treasury bills for £025,000, and £61, 626 from debt repayment resources,