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year, so it is essential that this Government should have at its disposal some substantial sum from which expenditure of this type, which cannot be postponed, and which cannot be met from the revenue, can be financed during 1948/49. It is difficult at present to decide on the maximum amount to which this Colony can safely issue a loan as there are a number of unknown factors, such as cost of the recommendations of the Salaries Commission, ond the effect on revenue and expenditure of the establishment of a municipality. Present indications are that this Government could provide for the services of a loan somewhat in excess of $100,000,000, always provided that the municipality would in due course take over their share of the liability, and I feel that it would be both more realistic and more honest from the investors' point of view if the Loan Ordinance, instead of authorising a loan of $100,000,000, is so framed as to provide for the raising of a loan not exceeding £150,000,000. This would allow a margin and there would be no commitment to issue the full amount. I should be grateful if I could be informed as early as possible whether you sec any objection to this as I am anxious to proceed with the enactment of the Ordinance. Not more than $100,000,000 would be issued this year, the initial issue being 5412 $50,000,000 as proposed in paragraph 4 of my No.1357 of
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3. In making the above recommendations, it is assumed that it is preferable to increase the amount of local loan issue rather then to rely on the Joint Colonial Funds to finance rehabilitation expenditure during. 1948/49, even though the rates of interest
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charged on advances from the latter source might be lower.