New Zealand debts

Press, Volume CXV, Issue 33957, 25 September 1975, Page 7

New Zealand debts

When a family is not making enough money to buy ail the things it wants, it sometimes borrows money to make up the difference. A person who borrows expects that, later on, he wilt have more money that he will need so that he will have a surplus to repay the loan. Countries have to do the same thing, especially countries like New Zealand which do not produce all the things they need, but must buy some of them' elsewhere. A person, or a country, cannot continue to borrow for too long before it starts repaying its loans. If it just keeps borrowing, others will stop lending. and the amount it earns will be taken up repaying what has been borrowed already. In the last year New Zealand has had to borrow more than $lOOO million because the things it imports — such as petrol and machinery — have become more expensive to buy. And the things New Zealand sells — such as meat and wool — are bringing in less money. New Zealand cannot force other countries to pay more for its exports; it cannot force others to charge less for the things New Zealand wants to buy. For the time being, New Zealand must buy fewer things overseas or it must continue to borrow money. Politicians and economists describe the difference between the amount of money New Zealand earns for its exports and the amount it must pay for its imports as the Balance of Payments. As the name suggests, the two amounts should balance out over a period ot time, or else show a profit for New Zealand. Otherwise. New Zealand will be in debt because it is buying more than it can afford to pay for immediately. For the last two years New Zealand has been buying much more than it could afford to pay for and its payments have only been balanced by borrowing. The political parties have different opinions about how much New Zea'-' land should borrow, and about whether New Zealand should stop buying some things until it can afford to pay for them immediately. The trouble is that many of the things New Zealand imports are necessary to keep factories busy here and to provide jobs for people. And if New Zealand decides to buy less from other countries, some of them might refuse to buy what New Zealand has to sell — which wouldonly make the situation worse. Many other countries have the same difficulty as New Zealand. This is probably the worst problem New Zealand has at the moment, it will be one of the things talked about most during the election campaign, and it is the problem for which it is most difficult to find a solution. There may not be a solution.