STERLING AREA DEFICIT

Press, Volume LXXXVIII, Issue 26633, 19 January 1952, Page 7

STERLING AREA DEFICIT

N.Z. Part in ShortTerm Plan

(Special Correspondent N.Z.P.A.)

(Rec. 7 p.m.) LONDON, January 18. The New Zealand Prime Minister (Mr Holland) is believed to have told a private meeting of the (Commonwealth Finance Ministers yesterday that New Zealand would accept the short-term proposals suggested at the previous discussion on Wednesday as his country’s share in the plan to assist in halting the drain on the sterling area’s gold and dollar reserves. Mr Holland, it is understood, fold the conference that the target set for New Zealand was severe, but that it was one which the Dominion could reach without undue disturbance of her economy. The fact that New Zealand had already taken certain steps, such as freezing a proportion of her wool cheque, made her decision much easier than it might otherwise have been. These steps and other contemplated plans, together with the new proposals, which Mr Holland said he would submit to his Government within the course of the next few days, would, he expected, be adequate to meet the requirements for the target set for New Zealand.

The Ministers agreed that the shortterm plans to meet the present deficit would not be entirely sufficient and that long-term measures would be needed. These would be for each country to decide individually. Cabinet decisions on these long-term measures would be necessary in each country. The measures were not expected to be very palatable. It is anticipated that the Ministers will meet again privately to-day and that there may also be a plenary session. A further meeting may be held tomorrow morning, and the conference may extend to Monday. Imports from Europe The Finance Ministers also considered yesterday the need to cut imports from Western Europe—the European Payments Union countries —as an important part of the immediate shortterm proposals to overcome the sterling area's economic crisis. Financial observers said they thought that extended restriction on European imports would be unavoidable because the sterling area’s huge deficit with the European Payments Union had been the major factor in the serious drain on gold and dollar reserves. In addition to gold losses, part of which were to the European Payments Union, the sterling area in the last half-year used 831.000.000 dollars of European Payments Union credit. The Ministers will examine later the long-term measures which Australia prefers to short-term action.