asked the Minister for Finance on what basis provision is made for the amortisation of the National Debt, giving the rates of interest and provision for capital redemption per annum and the term of years, in respect of debt under each loan heading set out in the Finance Accounts.
Written Answer. - National Debt Amortisation.
The amortisation of the several National Loans listed in the Public Debt Statement as shown in Account No. XXIV of the Finance Accounts for the year ended 31st March, 1951, is based on the provision made in the prospectus of each loan.
The following statement shows the percentages of the original nominal amounts of each loan set aside annually to cover both interest and sinking fund:—
|
Annual provision for interest and sinking fund |
||
|
% |
||
|
*5% |
Second National Loan, 1950/60 |
6? |
|
*4½% |
Third National Loan, 1950/70 |
5¼ |
|
3½% |
Fourth National Loan, 1950/70 |
4? |
|
*4% |
Conversion Loan, 1950/70 |
5? |
|
3¾% |
Financial Agreement Loan, 1953/58 |
4¾ |
|
*4% |
Exchequer Bonds, 1950/60 |
5½ |
|
3¼% |
National Security Loan, 1956/61 |
4¾ |
|
3% |
Exchequer Bonds. 1965/70 |
4 |
|
3½% |
Exchequer Bonds, 1965/70 |
4½ |
Holdings of the loans marked with an asterisk have since been either redeemed or converted into 3½ per cent. Exchequer Bonds, 1965/70.
The sinking fund provision is the difference between the total percentage sum set aside and the amount required to pay interest at the rate indicated in each loan title. In so far as sinking fund monies can be used to purchase National Loan stocks for cancellation at or around the issue price the sinking fund can be deemed to accumulate at the interest rate applicable to the particular loan stock cancelled. On this assumption, the various sinking fund provisions would be sufficient to redeem the following proportions of the original nominal amounts of extant loans by the final redemption dates:—
|
% |
||
|
3½% |
Fourth National Loan, 1950/70 |
80.4 |
|
3¾% |
Financial Agreement Loan, 1953/58 |
29.4 |
|
3¼% |
National Security Loan, 1956/61 |
40.4 |
|
3% |
Exchequer Bonds, 1965/70 |
29.9 |
|
3½% |
Exchequer Bonds, 1965/70 |
26.6 |
No express provision has been made for the redemption of ways and means advances. Provision has, however, been made for the redemption of borrowings to cover expenditure on voted "capital services" by means of annuities for a 30-year term charged on the Central Fund. The interest rate at which these annuities have been computed is 3½ per cent.
No annual provision is made by way of sinking fund to cover principal repayments of savings certificates. Repayments are met by issues from the Central Fund as required. The Savings Certificates Reserve Fund (Principal Reserve Account) contained at 31st March, 1951, a balance of £618,911, representing allocations made in pursuance of express statutory provisions.
The Terminable Annuity under Section 6 of the Damage to Property (Compensation) (Amendment) Act, 1926 is payable to the British Government in accordance with the provisions of that Act for a term of 60 years from 1926.
The dollar borrowings from the United States Government are repayable in accordance with the terms of the Loan Agreements dated 22nd December, 1949 (P. No. 9797) and 30th June, 1950 (Pr. 159). The first half year's interest is payable on 31st December, 1952, and principal repayments are due to commence on 30th June, 1956, and to terminate on 31st December, 1983.
Full particulars of the interest and sinking fund charges in respect of the public debt are set out in Account No. XIII of the Finance Accounts and in the footnote thereto.