EXHIBIT (j)(2)

                         AMENDMENT TO CUSTODIAN CONTRACT

         AGREEMENT made by and between State Street Bank and Trust Company (the
"Custodian") and The First Australia Prime Income Fund, Inc. (the "Fund").

         WHEREAS, the Custodian and the Fund are parties to a Custodian Contract
dated April 11, 1986 (the "Custodian Contract") governing the terms and
conditions under which the Custodian maintains custody of the securities and
other assets of the Fund; and

         WHEREAS, the parties hereto desire to amend the Custodian Contract to
provide for the maintenance of certain of the Fund's foreign securities and
other assets in the custody of State Street London Limited (the "Trust
Company"); a company incorporated under the laws of the United Kingdom with the
power to act as a trustee and as a custodian of securities;

         NOW THEREFORE, in consideration of the premises and covenants contained
herein, the Custodian and the Fund hereby amend the terms of the Custodian
Contract and agree to the following terms and conditions:

         1. The Fund hereby authorizes and instructs the Custodian to employ the
services of the Trust Company, as the sub-custodian in the United Kingdom, to
hold securities and other assets of the Fund, subject to the terms of the
Custodian Contract and to the terms and conditions hereof.

         2. The securities to be held by the Trust Company shall be limited to
"foreign securities" as defined by paragraph (c) (1) of Rule 17f-5 under the
Investment Company Act of 1940 (the "1940 Act").



         3. Cash held for the Fund in the United Kingdom shall be maintained in
an interest bearing account established for the Fund with the Trust Company,
which account shall be subject to the direction of the Custodian, the Trust
Company, or both.

         4. The Custodian represents that it has obtained an order from the
Securities and Exchange Commission, pursuant to Section 6(c) of the 1940 Act,
exempting the Custodian and the Fund from the provisions of Section 17(f) of
said Act, to the extent necessary to permit the securities and other assets of
the Fund to be maintained in the custody of the Trust Company.

         5. In delegating custody duties and obligations to the Trust Company as
permitted hereunder, the Custodian agrees that it shall not be relieved of any
responsibility to the Fund for any loss due to such delegation to the Trust
Company, except: such loss as may result from: (a) political risk (including,
but not limited to, exchange control restrictions, confiscation, expropriation,
nationalization, insurrection, civil strife or armed hostilities) or (b) other
risk of loss (excluding bankruptcy or insolvency of the Trust Company not caused
by a political risk) for which neither the Custodian nor the Trust Company would
be liable (including, but not limited to, losses due to Acts of God, nuclear
incident and other losses under circumstances where the Custodian and the Trust
Company have exercised reasonable care).

         6. Except as specifically superseded or modified herein, the terms and
conditions of the Custodian Contract, shall continue to apply with full force
and effect.

         IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the day of , 1986.

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ATTEST:                              THE FIRST AUSTRALIA PRIME INCOME FUND, INC.


/s/ Allan Mostoff                    By: /s/ illegible signature
------------------------------           -----------------------
(Assistant Secretary)                    (Title)
                                         (Assistant Treasurer)


ATTEST:                              STATE STREET BANK AND TRUST COMPANY


/s/ illegible signature              By: /s/ illegible signature
------------------------------           -----------------------
(Assistant Secretary)                    (Vice President)

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