I.M.F. Told Of Intentions

Press, Volume CVII, Issue 31542, 2 December 1967, Page 13

I.M.F. Told Of Intentions

(N.Z.P.A. -Reuter —Copyright) LONDON, Dec. 1. Britain had given the International Monetary Fund a comprehensive programme with which she hoped to solve her economic problems after sterling’s devaluation, it was officially announced yesterday. The new Chancellor of the Exchequer, Mr Roy Jenkins, took the unusual step of publishing a statement of intentions sent by Britain to the fund when it successfully asked for a new SUSI4OOm credit. The document was published after Mr Jenkins sidestepped a row threatening in the House of Commons over reports that the fund had imposed stringent conditions on Britain. He limited himself to saying that the undertakings were spontaneously given by

Britain and were not imposed on the Government by the I.M.F.

The 16-paragraph letter to the I.M.F. refers to measures already taken by the Government to help switch resources to exports when it announced the 14.3 per cent devaluation of sterling on November 18. It said: “They intend to take further action once it becomes apparent that such action is required to secure the necessary balance-of-pay-ments surplus.” The main points of the British proposals are:—

The Government aims at an improvement of at least £5OO million a year in the balance of payments. “On present prospects for world trade this should mean a surplus in the second half of 1968 at an annual rate of at least £2OO million, it said.

The Government will make sure that the budgetary deficit of £l3OO million this year, which was expected to rise in the next financial year, will be

held down to not more than £lOOO million. There will be a tight check on inflationary spending. Present arrangements to supervise the prices and incomes policy will be strengthened so that “the rise in wages and salaries does not exceed what the economy can afford over the next 12 months.”

As the balance of payments strengthens, the Government will consider what relaxations can be made in the present restric-

tions on capital transfers. The amount of money in circulation in Britain will not be increased in the coming financial year.

The letter to the LM.F. promised that Britain will consult with the fund during the period of the standby arrangement to find “appropriate solutions to British economic problems.” It emphasised that the Government believed the policies it had outlined would prove enough to achieve its economic aims.

But it added: “If present policies should turn out to be inadequate, the Government is firmly determined to take such further measures as may be necessary to achieve these goals.” Earlier, Mr Jenkins told House of Commons questioners the Administration’s proposals were aimed at preventing inflation next year and

did not involve any over-all deflationary policy.

He said Britain had no intention of drawing oh its new credit in the near future and emphasised: “The intention is firmly and clearly that this standby credit should in no way be a subsidy to our standard of living in this country, now or in the future. “It is a piece of international monetary management in the interests of sterling and of the rest of the world.”