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The Petz Press has obtained a copy of the censored Auditor General's report to Cabinet and Congress on the Victory Bond Program. All indications are that the program has proven to be a successful program that should again be considered for future use.


The following is an independent analysis of the government implemented Victory Bonds program. The purpose of such a report is to identify both the positive aspects of this program as well as any shortcomings experienced during its implementation.

Following the invasion of eCanadian soil by Peace nations, the government of eCanada proposed and implement a bond program designed to generate extra funds for the defence of the nation. The Victory Bond program that was approved offered both citizens of eCanada and eCanadian corporations the opportunity to invest gold with the guaranteed investment return of 40 CAD for each gold piece invested. This return rate offered a significant return compared to the monetary market exchange rate at the time of issuing which was 1 gold = 33 CAD.

The program generated a total of

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gold. From this amount, approximately --% of the gold received was invested by eCanadian citizens with the remainder coming from corporations. The invested gold was a vital life line that permitted the nation to hold out as long as it did. Based on the agreed investment return rate, the government had liabilities of

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CAD.

Approximately a week ago, the government commenced repaying investors on a first donate, first repay basis. To date approximately --% of the bonds have been repaid leaving

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CAD to still be paid out. The repayment is being done in such a fashion that it will not jeopardize on-going military operations as eCanada attempts to regain all of its regions and will continue at an acceptable pace.
Upon analysis of the program, this office believes that the program was a success based on its immediate impact on the war and the government’s ability to honour the guarantee it offered investors.

Positives aspects of the program:

1) Generated significant and immediate funds for the war effort

2) The amount of gold obtained and the subsequent CAD owned back to investors should be easily covered due to the fact that the government may issue CAD at a rate of 50,000 CAD per 250 gold.

3) The rate of return offered was both adequate and fair based on the market prices at the time of issuing.

4) The repayment process is already under way despite some regions of eCanada still being in enemy hands. This shows that a program such as the Victory Bond program can allow the nation to survive while giving it flexibility to re-establish itself after an occupation and would not cripple the government and any reconstruction following a war.

Negative aspects encountered during the program:

1) When implemented, there was no mention of a timeline or procedure for repayment to investors for the Victory Bonds. Investors (despite acknowledging the risk of losing all their investment should the nation and government fall completely) were not given any indication as to when their investments would be repaid, either a pre-determined date or a set condition.

2) Repayment has begun following a first invest, first repay methodology.

Recommendations based on program experience:

1) Repayment Procedure: Both the timing and methodology for repayment should be examined and improved for any future bond issues.

A) It is the opinion of this office that although citizens were the major investors in comparison to corporations and organizations, we believe that organizations should have their bonds repaid first. We believe that by doing this, organizations would be able to get back up to strength and full operation sooner which would help the economic recovery. Rebuilding the economy must be a major priority following a major conflict as the tax revenue taken in with a strong economy would ease the paying off of outstanding bonds and also provide funding for military operations and other government programs. Therefore, we suggest two classes of bonds should be considered for issuing: one for citizens and one for organizations. This would make it easier for the tracking of investments and for subsequent repayment. Both bonds may have the same rate of return or each class may have a different rate as pre-determined and approved by the governing body (congress).

😎 For any future bond issuing we also believe that an appropriate timeline for repayment be indicated to investors prior to the commencement of the offering. By doing so, this will protect investors and not allow the government to withhold repayment for a prolonged period of time for no reason. This may include offering investors varying rates of return depending on the maturing date of the bonds. For example: A bond holder may be entitled to a full return upon full maturity (example; 40 CAD, two months after the complete recapturing of all eCanadian territory) or the bond holder may receive less than full payment if the bond is cashed before full maturity (receive 35 CAD, one month after the complete capturing of eCanada). In each case, no bond holder would receive any payment unless the pre-stated minimum maturity date or condition was met (for example: complete recapturing of eCanadian regions).

2)Current Repayment: At present just under --% of the bonds have been cashed in, We believe that this process should not be expedited but should continue at its current pace so that it would not endanger the nation’s balance or gold reserves. However, with the recent liberation of two other eCanadian regions and the projected increase in revenue, the administrator of the bond program, in coordination with the MOF and PM may decide to increase the speed of repayment as long as it is financially responsible and does not hamper current objectives and governmental priorities.

3) Future Bond Issuing: With the relative success of the Victory Bond program, this office believes that it is completely reasonable for the government to consider future bonds (including bonds outside of a war situation) as a method for acquiring large amounts of gold for specific projects or programs. However, we believe that currently the government should only have one outstanding bond issue. Therefore it is suggested that no future bonds be considered until all victory bonds or any other bond issuing has been paid out. We also believe that the government should consider issuing a series of bonds for the reconstruction of the nation. For example, a specific amount of bonds could be issued for the purchase of a hospital or defense system for a province based on the actual cost needed to fund the project. By capping the total amount of bonds issued for a particular project, the government would be in a position to make the purchase and also minimize the amount it is required to repay and the length of time needed to repay the particular bond issuing.

These noted observations and suggestions concerning the Victory Bond Program have been made without prejudice and are intended to provide a starting point for discussion for potential future bond issues. In general, the feedback received has indicated strong support for these types of bonds while the only major concerns have tended to focus on when investors would receive their money back.


Petz
Auditor General