Bank’s Warning On Exchange Margin

Press, Volume CII, Issue 30200, 3 August 1963, Page 12

Bank’s Warning On Exchange Margin

(New Zealand Press Association)

WELLINGTON, August 2.

It was a sobering thought that New Zealand had to keep a tight restraint on imports at a time when returns from exports were near to being a record and when a policy of import replacement had been vigorously pursued for some years, said the annual report of the Reserve Bank tabled in Parliament today.

If the prices of all major commodities were to fall at once—and this was by no means a remote possibility—there was now so little scope for cutting imports substantiallj that massive overseas borrowing would be necessary to supplement the drawings on inadequate reserves to bridge the gap, and, at the same time, maintain full employment. “In spite of the welcome additional facilities for primer, -producing countries recently announced by the International Monetary Fund, it is bj no means certain that finance to the amount required would be available even in the short term.” said the i eport. “Painful adjustments would have to be made if low export prices continued for any length of time.” It was vitally necessary in such circumstances to try to reduce the vulnerability of export returns by pressing

on with efforts to diversify both export products and markets.

“In particular, we must continue to take every opportunity to press for the adoption of the same liberal trading policies in agricultural proc i. cts which are judged internationally to be so important in the case of manufactured goods.” said the report New Zealand's external position had improved greatly, but it still remained the main problem. On the basis of private imports of £2st million, the balance of payments might again lapse into a moderate current account deficit in spite of a forecast of record export receipts. This level of importing might place some constraint on the rate of internal economic expansion, but the net' outflow on “invisible" payments had to be met and placed limitation on the amount available for other overseas payments.