Trade balance

Press, Volume CXI, Issue 32701, 2 September 1971, Page 12

Trade balance

Sir,—ln your Saturday issue you quoted Mr Muldoon: “The trade balance for the March year was not a record deficit of s2o2m but a surplus of sls6m, which by the June year had grown to $173m.” Unless Mr Muldoon refers to cash transactions, including large-scale borrowing, his figures are ununderstandable. The Department of Statistics “Key Statistics” for June (p. 22 give a March year balance-of-payments deficit of s2o2m. The July issue (pp.2l and 22) shows a trading deficit of s26m for this year compared to a surplus of sBlm last year. Add to the trading deficit “invisibles” and it will be seen that New Zealand’s balance of payments on current account is going from bad to worse. May I ask Mr Muldoon whether he considers this , situation satisfactory? ; Yours, etc., i W. ROSENBERG, i August 26, 1971.

[The Minister of Finance (Mr Muldoon) replies: “Mr Rosenberg’s statement is a remarkable confession of ignorance. My quotes are from the Reserve Bank record of overseas exchange transactions. They include no ‘large-scale borrowing.’ The $202 million is not a trading figure at all but a balance-of-payments currentaccount balance which includes, for example, $2O million of plant and equipment

for the Bluff aluminium smelter as a debit but no Credit for the consequent capital inflow and other similar anomalous items. Mr Rosenberg’s comparisons are faulty as he compares c.i.f. imports with f.o.b. exports. The f.o.b. figures from the same source show a trade credit. The position has gone from very good to quite good, and in the last four months has been improving, not deteriorating. I do not consider it satisfactory that a man in Mr Rosenberg’s position should so distort the facts.”]