NEW ZEALAND'S PROBLEM
I suppose it was inevitable, but it is none the less a pity that New Zealand's financing problems should be discussed in the heat of politics rather than the cool—I will not say chilly—atmosphere of economics. Here is a debtor whose willingness to honour obligations has never been in the slightest doubt, and whose financial stability is a matter of great concern not merely to the Dominion itself but to the Mother Country. Certain financing problems now await solution of which the most urgent is that of taking care of the maturity next January of just over £17,000,000 of 3k, per cent. stock. In normal circumstances, even allowing for the fact that £17,000,000 is a large maturity for so small a country as New Zealand—it means nearly £m per head of population—the necessary arrangements could easily be made on a satisfactory basis. But circumstances are not normal either with regard to New Zealand's credit status itself or in the London capital market.
It is an open secret that New Zealand's sterling balances now amount to something under £14,000,000 with the period of seasonal contraction drawing near. Substantial interest payments have to be covered and it is hard to see how an empty locker can be avoided. In the circumstances, I have a good deal of sympathy with Mr. Nash who is still trying to steer a middle course between the Scylla of City orthodoxy, which prescribes some vigorous slimming and the Charybdis of the counsels of British exporters who are complaining bitterly of New Zealand's recently-imposed restrictions on imports. I imagine that neither the Treasury nor the Bank of England has suggested to Mr. Nash that it is impossible to put through even large-scale financing in London—on terms. I am also convinced that the terms at present offered are very stiff but might become less so if Mr. Savage's Government agrees to soft pedal on social reform. Not that the City is opposed to New Zealand's political policies as such ; it is not. Put it is and must be concerned with their financial results and implications.
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