‘Important Talks’ On Trade Problems

Press, Volume CVI, Issue 31166, 16 September 1966, Page 14

‘Important Talks’ On Trade Problems

(New Zealand Press Association) WELLINGTON, Sept. 15. New Zealand could face “serious consequences” if its trade and capital inflow were cut back drastically because of a decline in the effectiveness of the international payments system, the Minister of Finance (Mr Lake) said today.

Mr Lake will leave tomorrow for the Commonwealth Economic Consultative Council meeting in Montreal and the annual meetings of the International Monetary Fund and the World Bank in Washington this month.

Issues of the utmost importance to New Zealand would be discussed, he said. In the last decade the value of world trade had virtually doubled and international reserves had grown sufficiently to finance the increasing vein me of trade.

■ However, growth of acceptable international reserves

had occurred because for a number of years Britain and the United States had been running persistent balance-of-payments deficits.

The deficits of the two countries had made available to the rest of the world additional sterling and dollars for financing trade. "It. is self-evident that Britain and the United States cannot continue to run deficits indefinitely,” he said.

“Both countries are now acting to prevent further deficits and to move into surplus. “This will turn the net outflow of their currencies into a net inflow—a situation towards which progress should be made during 1967,” said the Minister.

“If this happens, measures will be needed to increase the supply of internationally acceptable reserves and to maintain a satisfactory international capital market. “Unless this is done there could be a contraction of world tWttfe and a slowing of world economic growth merely because there are insufficient international reserves in the form of gold and of currencies which are an acceptable substitute for gold,” he said.