I wish to inform the House that a new National Loan to be known as Exchequer Stock will open for subscription on Monday next, 20th November. The Loan will be for £17½ million, but £3½ million of the stock is being allotted to certain life assurance offices so that the amount available for public subscription will be £14 million which will be underwritten jointly by the Banks and the Government.
The rate of interest will be 6 per cent. per annum and the price £97 for each £100 of stock purchased, so that the annual return on each £100 of cash invested in the Stock will be £6 3s. 8d. The Stock will be redeemed at par not later than 1985 and may be redeemed at any time from December, 1980. As the issue is being made at a discount, there will be a capital gain of £3 per cent. on redemption and this will be tax-free to the ordinary investor. The yield of the Stock to final redemption in 1985, taking this capital gain into account, will be £6 4s. 9d. per cent.
As the Loan will carry the same terms as to interest and redemption as the 6 per cent. Exchequer Stock issued last year, it will be amalgamated with last year's issue after the first interest payment is made next June.
The usual provision is made in the Prospectus whereby only 10 per cent. of the purchase price need be paid on application, the remainder being paid in three further instalments spread over the period until late January. This should facilitate investors in taking up stock. On the other hand, those who wish to pay the full amount on application next week, or to complete their subscription on allotment in December, will be entitled to discount equivalent to an interest rate of 6 per cent. on the advance payments.
The tax privileges attached to recent National Loans are again included. Interest will be paid without deduction of income tax at source, but, of course, holders will, if ordinarily resident in the State, be liable for whatever tax on the interest is appropriate to their respective incomes. Stock of the issue will be accepted at its nominal value as the equivalent of cash in satisfaction of death duties on properties of which it formed a part. The stock and the interest on it will be exempt from all Irish taxation, present and future, if owned by a person neither domiciled nor ordinarily resident in the State.
The issue is being made under the authority of the Appropriation Act, 1961, and other statutes. Both principal and interest will be a charge on the Central Fund. The attractive interest rate it carries, its status as a trustee security, the concession whereby it will be accepted in payment of death duties and the substantial sinking fund allocations should ensure that the stock will always have a high market value. The Government stockbroker will at all times be prepared to buy and sell reasonable amounts of the stock, and this will help to maintain an active market in it.
The 3¼% National Security Loan, 1956-61, is due for redemption on 1st December next. There is £4.7 million of that stock outstanding and I am giving holders an option of converting into the present issue. This is a very attractive offer and I hope it will be availed of to a large extent. Stock of the new loan issued under this conversion arrangement will be additional to the stock issued for cash.
£2½ million of the stock will also be issued to Departmental Funds in conversion of Ways and Means Advances.
The Loan is required to assist in the financing of State capital outlay on agriculture and industry; on housing, sanitary services and schools; on afforestation and fuel resources; on transport and on other development schemes in pursuance of the Programme for Economic Expansion outlined in the Government White Paper published in November, 1958.
As Deputies are well aware, the main source of capital for economic expansion must continue to be the people's savings. It is only by applying the maximum amount of resources to productive purposes at home that we can increase employment and raise living standards. I should like, therefore, to emphasise once again the importance of a high level of savings. The new Loan gives an excellent opportunity for the investment of savings and subscribers to it will be doing their part to promote the development of the national economy while at the same time securing for themselves a safe investment and a very attractive return on their capital.
The Prospectus of the issue will be published in tomorrow morning's newspapers. Copies of the Prospectus with the application form for cash subscriptions attached will also be available as from tomorrow from any bank, stockbroker or post office. The lists will close not later than Friday, 24th November.
I confidently ask for the full and active support of every Deputy in the House for the issue.