Unemployment And Lending Link Denied

Press, Volume CVII, Issue 31462, 31 August 1967, Page 22

Unemployment And Lending Link Denied

(N.Z. Press Association) WELLINGTON, August 30. Allegations that the International Monetary Fund and the World Bank required a borrowing member nation to have a certain percentage unemployed as a condition of a loan, were again strongly denied in Parliament today.

Mr G. F. Gair (Nat, North Shore) referred to the Minister of Finance (Mr Muldoon) two statements made by Mt V F. Cracknell (S.C., Hobson), one stating that the World Bank required a percentage of unemployment before it would lend money and the other stating it was the

International Monetary Fund that made this demand. He asked Mr Muldoon if either of these organisations demanded unemployment as the price of its lending. Minister’s Assurance Mr Muldoon replied: “I can give a categorical assurance that both these statements are incorrect. “One of the declared aims of the I.M.F. is the maintenance of high levels of employment as a primary objective of economic policy. Similarly, the World Bank is concerned to promote a faster rate of development, higher levels of real income and enlarged employment opportunities in the country to which it lends. “Mr Cracknell’s allegations are not only inaccurate, but mutually contradictory, and I would welcome a statement from him as to which of the two reported statements, if either, represents his real views.”

Mr Cracknell asked if the Minister believed that the I.M.F. loan of $42 million on May 6 would in fact have been granted if the miniBudget introduced on May 4 had not increased unemployment

Mr Muldoon replied that surely Mr Cracknell must realise the drawing granted

by the I.M.F. at that time must have been negotiated a long time earlier.

There was no indication that the measures taken on May 4 were to be taken when the loan in question was negotiated, he said. Officials’ Role

Mr W. W. Freer (Lab. Mount Albert) asked if the IM.F. officials who recently visited New Zealand expressed “concern, pleasure or indifference” at the number of unemployed in New Zealand. Mr Muldoon said it was not a question of their expressing any of these feelings. The officials were here to look around New Zealand and ultimately report to the New Zealand Government on the country’s long-term capital requirements. The Leader of the Opposition (Mr Kirk) asked on what basis of employment was the World Bank likely to judge New Zealand’s future requirements for capital. Mr Muldoon: I would think they would view the position of employment as a question of the employment of resources, one of which is labour. This would seem to me to be the line along which they are working. Mr Cracknell asked if the Minister believed that the steep rise in unemployment in Australia in 1960-61, at a time when it was drawing heavily from the 1.M.F., and the similar position in Britain today, was a coincidence. Mr Muldoon replied that it was a form of coincidence, but the economic conditions suffered by these countries were at the same time likely to cause unemploymnt and create a need for drawing loans from the IM.F.