Overseas borrowing

Press, Volume CXIV, Issue 33693, 16 November 1974, Page 16

Overseas borrowing

Sir—ln reply to L. Baker: to pav for imports and overseas debts an excess of exports over imports is neces-

sary. Internal money is unacceptable to foreign creditors. To remain solvent we must increase exports (which supply us with money acceptable to foreigners) and reduce imports. Imports can be reduced by squeezing the import-purchasing-power of New Zealanders. This will also affect their demand for local goods. Import controls can also reduce imports. If only “squeezing” is used there will be unemployment and lack of demand for New Zealand industry; if only import controls are used there will be too much purchasing power chasing too few New Zealand-made goods. The sane policy is to combine a moderate squeeze and moderate import controls. A condition for the $BO million oil-facility loan from the I.M.F. is abstention from the policy of import controls. That leaves the “squeeze” as the only weapon—and unemployment.—Yours, etc., W. ROSENBERG. November 14, 1974.