Oil rigs boost deficit

Press, 9 March 1984, Page 1

Oil rigs boost deficit

PA Wellington The arrival of two oilexploration rigs helped push New Zealand’s current account deficit for the December quarter to almost double that of the previous year.

Figures from the Statistics Department yesterday showed that the deficit for the December quarter was $Bl7 million, compared with $424 million in the December, 1982, quarter.

Although the two oil rigs, the Benreoch and the Sedco, are under charter, they are treated as a capital import because they will be working in New Zealand waters for more than a year. When the rigs leave New Zealand, they will be recorded as an export. Labour’s spokesman on finance, Roger Douglas, said yesterday the balance-of-payments figures showed New Zealand still “massively in the red externally." Mr Douglas said he was aware that the arrival of the oil rigs had added to the imports figure but “over all the picture and trend are bad.

“In the December quarter exports are up 6.8 per cent while imports are up 12 per cent, after allowing for the rigs,” he said. “The growth rates should be the other way round if we are to reduce the growth in the external debt burden, but election-year policies have allowed imports to shoot up, more than offsetting any gains by exporters.”

Mr Douglas said the category including debt-servic-ing expenditure had grown 15 per cent in a year, and that the growth was set to continue under present Government policies. The Minister of Overseas Trade, Mr Cooper, said the latest balance-of-payments figures were “quite satisfactory” although at first glance they “did not look good.”

“In New Zealand’s export figures wool is looking better although the gain there is offset by lower dairy product receipts,” said Mr Cooper. He also said that manufactured exports increased 35 per cent in the December, 1983, quarter and looked “very positive” for the 1984 calendar year. “Beyond that, there has been a small increase in imports as the New Zealand economy has picked up since the middle of 1983. There will be few people who do not welcome the economic upturn.” Over the next few months releases of balance-of-pay-ments figures could be expected to be an improvement on the December result, “as they pick up the main exporting season.”

“Over 1984 we will also benefit from a progressive completion of the major projects, imports for which cost an estimated $BOO million during 1983, as they contribute more to exports/’

The arrival of the two rigs boosted imports for the three-month period by almost S3OOM. Imports were 29 per cent higher at $2224M than in the three months to December, 1982, while exports were 7 per cent ahead at $1895M. In spite of the unusual boost in the deficit for the December period, the deficit for the 1983 calendar year was down, at $1768M, on the previous year’s $2190M. The export and import figures for the three-month period resulted in a balance on merchandise trade of a $329M deficit, compared with a SS4M surplus the previous year. The figures also show that Government borrowing for the quarter was well up at $764M (SS6IM), while loan repayments were down at S4SM (S9SM).

The December quarter’s deficit of SBI7M compared with deficits for the March, June, and September, 1983, quarters of SI49M, SI77M and $625M respectively. Current account deficits for the March, June, and September, 1983, years were $2040M, $1572M and $1374M respectively. “The increased deficit of $1768M for the year ended December, 1983, reverses the recent trend in which the annual balance on current account at quarterly intervals showed a falling pattern for the first three quarters of 1983.”