N.Z. CREDIT SQUEEZE

Press, Volume C, Issue 29638, 7 October 1961, Page 13

N.Z. CREDIT SQUEEZE

“Reserves At Crisis Level”

(N.Z. Press Assn. —Coyvrtpht) LONDON, October 6.

The New Zealand Government's decision to tighten credit still further was an indication of the extreme seriousness of the country’s balance-ofipayments situation, a “Financial Times” report said today. “The seasonal decline in the country’s reserves has yet to have its full effect,” the report said. “This year a Strong demand for imported raw materials and finished goods has combined with r-r-r prices for wool, butter and cheese to bring the country’s reserves down to a crisis level. “The New Zealand Government has already done something to try and build up tfrp b v *■»£ issue of import licences and the lending power ot me commercial banks. “In addition, the Finance Minister (Mr Lake) has just come to the end of a round trip to Geneva, London and New York in search of loans. “These measures do not seem to have been effective enough and the new measures to damp down the economy and choke off demand were probably decided when the final results of September's trading were worked out. “This further credit squeeze is, according to many observers, still inadequate for the crisis.

“Increased purchase tax and income-tax together with a cutback in the country’s ambitious social welfare programme is seen by many as the only salvation in the present very dangerous conditions,” the report said. “The absence of fiscal measures or any cut in Government expenditure is taken as a bad omen.”