CO129-534-6 Loans for public works 24-2-1931 - 11-8-1932 — Page 74

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Reckoning the sterling value of the dollar at 1/-

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the deficit on this year's working is estimated at $4,000,000

and however carefully expenditure is pruned it will be

impossible to reduce this deficit to less than $2,000,000

and should the dollar further depreciate the position i ll

be worse. The liquid resources of the Treasury will require

augmenting and this can only be done by means of borrowed

money and/or additional taxation. As the currency problem

is at the moment so obscure I consider it would be as well

merely to borrow this year under the Hong Kong Treasury Bills

Crdinance No.6. of 1926 and obtain a long dated loan in 1932

for $14,000,000 or its equivalent in sterling. Treasury

Bills could no doubt be sold by the Crow Agents for 31% per annum and would give a year in which full consideration could be given to loan proposals and methods of raising

further money, whether in sterling or dollars. Assuming that these proposals are approved money will be required as under

£200,000 Treasury Bills

1931

$4,000,000

1932

14,000,000 = of which $5,000,000 to

repay P.W.D. Ioan 1927 and $4,000,000 to repay

Treasury Bills 1931.

1933

4,500,000

1934

4,500,000

1935

2,000,000

1936

1,650,000

The interest on the Treasury Bills of £200,000 at

31% amounts to £7,000 or $140,000 which would have to be

provided during 1932. If the loan of $14,000,000 or £700,000 were placed on a twenty-eight years basis (Interest

on Sinking Fund investments being reckoned at 4%) with

interest 4% and sinking fund 2% and subsequent borrowings

on the same lines the cost to the Colony would be as under.

1933.