$1 billion deficit predicted by P.M.

Press, 6 March 1984, Page 1

$1 billion deficit predicted by P.M.

NZPA staff correspondent Washington The Prime Minister, Sir Robert Muldoon, yesterday predicted a current account deficit for 1984 of “just over” a billion dollars.

Figures released in Wellington yesterday showed a similar deficit of $1,027 billion for the year to January. That is a distinct improvement on the $1,681 billion deficit for the 12 months to January, 1983. Sir Robert said that the current account balance

was deteriorating, however, because of an increase in imports. The figures showed a deficit of $99 million for January compared with a surplus in January, 1983, of $34 million. Monthly figures were deceptive because of such factors as lags in payments, he said. “Our forward projections are that the annual figure will keep going at about the annual figure for the'January year.” It was impossible to be precise as export receipts depended on prices, and when goods were sold, Sir Robert said.

“We’re looking at projections of just over this billion dollar figure going ahead through 1984,” he said. Sir Robert, on. an official visit to the United States, is now in San Francisco, where he will be the main

speaker today at a seminar on his ideas for reform of the world trade and payments system. He arrived in San Francisco yesterday from San Antonio, Texas, where he talked with businessmen and bankers. New Zealand’s current

account deficit of $99 million for January compared with a deficit of S2OSM the previous month and a surplus of S34M in January, 1983. The annual current account deficit increased from SB94M for the year ended December, 1983, to $1027M for the year ended January, 1984, the Reserve Bank said yesterday. The annual current account deficit for the year ended January, 1983, was SI6BIM. Export receipts of $536M in January were down 3 per cent on January, 1983. The fall in receipts was largely due to low sales for lamb

exports while returns for forest products and dairy products were up 60 per cent and 69 per cent respectively. Import payments of SS4BM were well up on January, 1983 (S43BM). As a

result the trade balance showed a deficit of SI2M in January, 1984, compared with a surplus of SII3M in January, 1983. The deficit on invisible ‘ transactions for the month, SBBM, was slightly higher than that recorded in January, 1983 ($80M).

A net capital inflow of S44M was recorded for the month, with the net private capital inflow being S6IM. A 13 per cent drop in export receipts to $1646M was responsible for a trade deficit of S39M in the quarter ended January, 1984. It compared with a surplus of SI93M in the quarter ended October, 1983. The low January quarter figure for export receipts was seen as being partly due to seasonal factors, although the figure was also one per cent below that recorded for-the January, 1983, quarter ($1670M). The turnaround in the trade ac-

count resulted in a big deterioration in the current account deficit from $369M in th? October, 1983, quarter to |SOBM in the January, 1984, quarter.

The official and private capital inflows for the January, 1984, quarter were J37IM and SI7OM respectively. The private capital inflow had been boosted by the seasonal borrowing requirements of the Meat Board but it otherwise remained well below the level recorded in the January, 1983 quarter (+$379M). Export receipts for the year to January, 1984, were 10 per cent higher than in 1983 while import payments were 1 per cent lower. That resulted in an increase in the trade surplus from S39BM for the year ended January, 1983, to $1152M for the year ended January, 1984. The majority of the increase occurred in the first six months. During the second half of 1983 export receipts declined, while import payments increased. The deficit on invisible transactions increased by

SIOOM from $2079M to ?2179M during the year. That was largely a result of higher debt servicing payments related to’ the increased overseas borrowing during 1982-83. The net private capital inflow of SB97M has fallen below the inflow recorded for the year ended January, 1983 ($945M), and it was considerably lower than the peak inflow of J1352M in the 12 months ended in July, 1983. It reflected the lower capital financing requirements of some of the large investment projects and the changes that have occurred in domestic financial markets. The official capital inflow (including International Monetary Fund transactions) for the year ended January, 1984, was ?205M, well down on the J1269M recorded in'the previous year.

Official overseas reserves which totalled JI2IOM at the end of January, 1984, increased S3SM during the year.