Sir Bernard Ashwin Urges I.M.F. Membership

Press, Volume XCVII, Issue 28671, 22 August 1958, Page 10

Sir Bernard Ashwin Urges I.M.F. Membership

(New Zealand Press Association) DUNEDIN, August 21. New Zealand is in an economic mess and needs a “spot of good management” to get out of it, Sir Bernard Ashwin told the New Zealand Institute of Management conference today. Sir Bernard Ashwin was formerly Secretary to the Treasury. “We are in it, and we are not doings the right things of it,” he said.

Sir Bernard Ashwiri said what was needed was: 1. A reasonable degree of flexibility in exchange rates. 2. Short-term interest rates and, prices sufficient to enable them to be used as balancing forces. 3. Such forces should be co-ordinated with, and powerfully supported by, suitable Budget policies designed to withdraw surplus purchasing power when such is necessary. 4. To gain time to spread the internal adjustment to any serious fall in export prices and lessen the impact on the economy, New Zealand should join the Interntaional Monetary Fund. Joining the I.M.F. would open

World Bank which could be' ? useful source of long-term finance to bridge the gap between internal savings and capital expenditure on development works. Sir Bernard Ashwin said a general wage order increasing wage rates at present be a bad thing. , “It would increase costs of the export indust&es when their returns are down without conferring any real benefit on wage earners. It certainly would not

promote economic stability of the country.’’ Curtailment of capital works would not, iir the- short run, provide a flexible means of making any major economic readjustment, but it could provide some contribution to it, he added. “A general tightening up of trading bank advances will help, to some extent, by forcing manufacturers and traders to operate on lower stocks—if this is not already being enforced by import licensing—and generally to hold off available expenditure. Beyond that point further restriction of advances is likely to hamper production and trade ano thus be harmful,” he said. “The country needs the assistance of overseas capital to develop its resources If the present standard of living is to be maintained for an increasing population. Any such capital obtainable would more than earn its keep. “Long-term borrowing for development would avoid increasing inflation, but, being spent, it does nothing to reduce existing excessive purchasing power,” he said.